The UAE has taken a bold step toward encouraging fair competition and enhancing regulatory enforcement by implementing Federal Decree-Law No. 36 of 2023, which replaces Federal Law No. 4 of 2012. This substantial legislative change seeks to remove monopolistic behaviors, improve market transparency, and bring the UAE's competition framework in line with worldwide standards. Unlike the previous legislation, the new law broadens its scope to include economic actions outside the UAE that affect competition within the country. It also imposes stronger rules on mergers, acquisitions, and market dominance, ensuring that enterprises operating in the UAE compete on a level playing field.
One of the most notable modifications to the new competition law is its increased scope and applicability. While earlier legislation focused on controlled activities within the UAE, the amended law specifically included foreign businesses whose economic activities have an impact on UAE markets. It also retains particular exclusions for several businesses, including telecommunications, financial services, oil and gas, medicines, transportation, and utilities. However, these exemptions are now subject to government approval, ensuring that only organizations deemed important are eligible for special treatment. The law also clarifies key market concepts, such as dominating position, economic concentration, and abuse of economic dependency. A dominant position is no longer merely about market share; it increasingly refers to enterprises acting individually or collectively to exert dominance over a certain market. Furthermore, the legislation establishes the idea of economic reliance, which prohibits enterprises from manipulating clients who lack other supply sources.
With a greater emphasis on market fairness, the law strictly prohibits anti-competitive agreements and unfair corporate activities. Collusion, bid-rigging, price-fixing, and market allocation are now expressly prohibited, making it much more difficult for firms to influence competition at the expense of smaller competitors and consumers. The new law also strengthens supply chain restrictions, making it illegal for corporations to restrict access to critical products and services in order to create artificial scarcity or reduce competition. These measures demonstrate a clear commitment to creating a healthy, competitive environment in which firms prosper through merit rather than unscrupulous methods.
Another important feature of the new law is its emphasis on merger and acquisition laws. The new Act establishes stronger pre-approval procedures for mergers, ensuring that no transaction results in excessive market concentration, which could hinder competition. Companies looking to merge or buy competitors must now provide economic grounds, and regulatory agencies have the authority to reject transactions that jeopardize market fairness. Furthermore, stakeholders can protest to planned mergers, which promotes openness and public accountability in economic transactions. Failure to notify authorities of such transactions can result in serious financial penalties, making compliance an important part of corporate strategy in the UAE.
To improve enforcement, the new competition law establishes a more powerful regulatory system, including the Competition Regulatory Committee. This committee is authorized to investigate market activities, enforce compliance, and impose penalties on enterprises that engage in anti-competitive behavior. The new enforcement tactics are much more harsh than before, with fines of up to 10% of a company's total yearly sales. The minimum penalties has been upped to AED 500,000, and enterprises that persistently break competition regulations will risk interim closures lasting three to six months. Furthermore, for serious offenses, criminal prosecution is now possible, indicating a significant move toward harsher accountability for corporations that violate competition regulations.
In addition to enhancing enforcement, the law establishes a clear complaint and appeals process to protect businesses and consumers from unfair practices. The new structure allows aggrieved parties to register complaints with regulatory agencies, which must be resolved within fifteen working days. If a complaint is denied, firms can appeal, ensuring due process and openness in enforcement proceedings. The introduction of a systematic grievance procedure reflects the UAE's commitment to enforcing competition legislation fairly and effectively.
The Federal Decree-Law No. 36 of 2023 marks a significant shift in the UAE's approach to competition regulation. The UAE ensures a fairer and more transparent business climate by widening its reach, tightening market definitions, implementing stricter merger rules, and enforcing harsher fines. This rule is about more than just regulating competition; it is about creating a vibrant economic ecosystem in which enterprises behave ethically, consumers benefit from fair pricing, and the market remains dynamic and competitive. As businesses adjust to this new regulatory framework, compliance with strengthened competition regulations will be critical for long-term success. By accepting these changes, the UAE presents itself as a leading business-friendly jurisdiction that adheres to worldwide standards of market fairness and transparency.
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