With regard to competition or anti-trust laws, currently there
is no significant body of law in the UAE dealing with these issues.
Rather than encouraging vigorous competition, historically the UAE
has adopted, and to a large extent still does adopt, a cautious and
conservative attitude as evidenced by the various requirements
regarding local participation in business' carried out in the
UAE and the protections afforded to local registered agents under
the UAE Commercial Agencies Law (see our Article in this
month's Law Update entitled "Recent Changes to the UAE
Commercial Agencies Law").
UAE competition laws can be found in the UAE Consumer Protection
Law of 2006 (the "Law") and its implementing Regulations
of 2007 (the "Regulations").
The Law itself contains very few provisions regarding competition
law. It does state that the implementing regulations of the Law
shall set out the basis of determining when there has been an
abnormal increase in prices of goods and what constitutes an
The only other references to competition law principles in the Law
are a statement that the functions of the Consumer Protection
Department shall include the "monitoring and control of
prices" and that it shall "work to attain fair
competition and combat monopoly". The Law itself also places a
direct prohibition on suppliers attempting to manipulate prices of
goods by controlling supplies or imposing certain conditions on the
acquisition of goods in order to inflate prices (these principles
are repeated in the Regulations).
The Regulations deal with anti-competitive and monopolistic conduct
in greater detail than the Consumer Protection Law. The focus of
the Regulations, insofar as they relate to competition law issues,
is on abnormal movements in prices resulting from certain
prohibited practices. In our opinion, neither the Law nor the
Regulations prohibit monopolies per se. As a consequence, there are
no prohibitions on companies acquiring competitors and gaining a
dominant market position, for example, but rather there may be
prohibitions on actions taken by a dominant supplier if those
actions are seen as affecting prices to the detriment of the
national economy or consumers.
The Regulations describe the various situations which are
considered to be cases of prohibited monopolies. These include
selling goods or services at below cost for the purpose of creating
a state of monopoly in the market which will damage consumers, the
formation of alliances by more than one provider which causes harm
to the national economy or consumers and agreements, explicit or
implicit, between providers with regards to fixing prices again,
that cause harm to the national economy or consumer interest.
The regulations also set out factors that must be taken into
account when considering if there has been an
"extraordinary" effect on pricing. These include the
national inflation rate, the prices for the relevant goods or
services over past periods and comparison with prices in
It is worth noting that we have seen instances where the Consumer
Protection Department has made investigations into price increases
and the supplier has been required to justify such increases even
where there has been no unlawful monopolistic behaviour. Acceptable
reasons for increases can include increases in the cost of raw
materials or other costs (such as transportation costs) that need
to be passed on by way of a reasonable increase in the final price
of the product.
The Regulations also prohibit all contracts and agreements that
either aim to create, or have the impact of creating, a prohibited
Consumer Protection Department
Finally, the Consumer Protection Department is empowered to take
the necessary actions and measures against prohibited monopoly
practices and dealings that cause damage to the national economy or
the consumer interest. Such actions and measures would include
ordering that prices of goods be reduced to what the department
considers to be an acceptable level.
We are not aware of any other significant actions having been
required by the Consumer Protection Department in respect of
prohibited monopolies. However, the Regulations leave open what
actions may be taken and, in our opinion, it would be open to the
Consumer Protection Department to, for example, order that a
supplier divest itself of all or part of a business that is the
subject of a prohibited monopolistic practice (although, in
practical terms, such an approach may be unlikely).
In summary, the Law and the Regulations do contain clear
prohibitions on practices that are deemed to constitute unlawful
monopolies. The underlying basis for assessing what does constitute
an unlawful monopoly is the affect that any such practice has on
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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