Munir Suboh discusses Competition Law and how it has evolved in the region from the Practitioners Perspective.
Munir Suboh, Partner and Head of Intellectual Property Practice at BSA Ahmad Bin Hezeem & Associates LLP examines the implementation of the UAE’s Competition Law.
Federal Law No. 4/2012 on the Regulation of Competition has been in force since February 2013 and was enacted to protect and promote competition and anti-monopoly practices in the UAE. It was introduced to provide a stimulating environment for organisations to enhance efficiency, competitiveness and consumer interest and achieve sustainable development. It also provides suitable mechanisms for maintaining competitive markets governed by market mechanisms, in line with the principle of economic freedom, by prohibiting restrictive agreements, the acts and practices which lead to the abuse of dominant positions, controlling economic concentration operations and avoiding anything which will endanger, limit or prevent competition.
As a punitive damages doctrine or principle does not exist in the UAE’s civil law system, the Competition Law was drafted to penalise competition practices which affect the competition level in the relevant market, i.e. products or services or a combination of both based on their prices, characteristics and methods of use which could be replaced with any other goods or services or the alternatives of which may be chosen, to meet a specific consumer requirement in a certain geographical area. To expedite the process of prosecuting anti-competitive actions, the Competition Law established a special Competition Committee at the UAE Economy Ministry to investigate, receive complaints, issue recommendations to the Minister to resolve cases or refer violations to the public prosecution. The Competition Committee also issues rulings and clearances on commercial deals which can be subject to the scope of Competition Law. The usual time frame to run an investigation, given clearance on any commercial deal and conclude the final recommendations is between 30 to 120 days which make this one of the most expedited bodies for reviewing competition related issues.
Like competition or anti-trust practices in most developed countries, the UAE Competition law determines anti-competition practices in simple, clear and straightforward categories. In line with international practice, the Competition Law will apply to activities carried out by entities in the UAE, as well as the exploitation of intellectual property rights in and outside the UAE. In addition, the provisions of the Law and Regulation related to Competition in UAE apply to economic activities which are practised outside the UAE and whether it will have an effect directly or indirectly on competition in the country. These practices include restrictive agreements and abuses of dominant positions. Companies who intend to carry out economic concentration operations which may affect competition in the relevant market, to enhance or create a dominant position, have to apply for an approval from the Competition Committee before completing these operations. A very recent example occurred in 2019 when a leading multinational transportation network company who offered services to the public via an application which included peer-to-peer ridesharing, ride service hailing and food delivery decided to acquire another dominant entity which provided the same service. A request was made to the Competition Committee to consider and ensure compliance under the competition law. The clearance process assessed whether the economic concentration affected competition in the relevant market when decision makers found the market share of the parties did not exceed 40% of the total transactions undertaken in the relevant market and so clearance was issued.
We are eager to see more decisions ruled and published by the Competition Committee or by local competent courts on competition issues.
The Competition Law in the UAE is fairly new compared with laws in other countries, but certainly, is enforced according to the best international commerce standards. Competition Committee resolutions may need to be published to give a clear reference and better understanding on anti-competitive practices which violate local laws.
The Competition Committee has established a practical mechanism and is playing a vital role to facilitate, monitor, protect the market, clear transactions or decide to promptly reject deals which could breach competition law and practice. Multinational entities, corporations and traders will get more familiar with the competition practices when they see more decisions, resolutions and judgments issued in competition cases.