UAE's Updated Competition Law: Ensuring Fair Markets and Preventing Monopolies

Businesses operate in markets whose environment is crucial for them to thrive, the best market for a business to grow is a competitive one. Despite globalization driving intense competition, there are a few businesses that end up dominating the markets and creating monopolies.?

Now, what is a monopoly? A monopoly occurs when a market ends up with one business controlling the entire or majority of the market by selling at low prices or by building brand loyalty to the point of stifling competition.?

Consequently, this dissuades innovation and leaves customers with fewer product choices. Over the years, the UAE has attracted multiple businesses fostering innovation and promoting competition but as the markets mature the Ministry of Economy has had to update its Regulations of Competition federal law to uphold a fair market and prevent monopolies in the country.

According to the Mastercard SME Confidence Index, 91% of SMEs in the UAE are positive for this financial year with 90% expecting to earn the same and if not more than the previous year. These SMEs are in full swing, with seven out of ten seeking credit for their expansion plans.?

All this optimism is secured by the laws of the country as the Undersecretary of the Ministry of Economy stated “When investors enter any market, they need good legislation to protect their businesses. So the competition law is part of the protection for fair competition. We believe in the open, free market, but without fair competition, it will not be one. Otherwise, you will see a monopoly in the market which will have a big impact on new suppliers, investments, and facilities.”?

Back in 2012, the first anti-competition law was established in the UAE which only included some sectors. The recent update has included all sectors, given that the country accommodates 1.1 million companies and economic institutions, however, government-owned industries will be exempt from the law. The threshold is set at 40% of market share, thus, any company achieving this feat in their industry needs to report it to the authorities.?

Further, the law mandates that any company earning revenue exceeding AED 300 million in a financial year must report the situation to regulators. After reporting to the relevant authorities, it would take around 90 or more days to receive a decision based on the assessment of the respective industry markets.?

Notably, the verdict will determine whether the business can continue operating or if it must avoid mergers and acquisitions. Then it is up to the company to follow the decision or pledge to execute measures to prevent anti-competitive practices. Therefore, markets will continue to have low barriers to entry allowing startups to join easily.

As Dimitrios Dosis - Mastercard president of Eastern Europe, Middle East, and Africa, puts it “Small and medium enterprises are the backbone of economies, driving innovation, employment, and resilience.”?

Rest assured, the UAE government has your back, whether you own a startup or an SME!