3 weeks until UAE competition law goes into effect

UAE
The first true antitrust law of the Emirates will come into force on 23 February 2013.  “Federal Law No. 4 of 2012” (not to be confused with legislation relating to nuclear safety of the same title) was passed by the United Arab Emirates (“UAE”) government last October 2012.

Akin to established competition laws as well as some of its recent pan-African counter-part legislation (e.g., the 2004 COMESA regional antitrust regime that finally went into effect in January 2013), its primary jurisdictional scope encompasses:

  • (1) cartel prosecution and limits on similar restrictive agreements
  • (2) unilateral conduct / abuse of dominance, and
  • (3) mergers and acquisitions.

As to M&A, unlike its COMESA sibling, the law — fortunately — will contain yet-to-be-determined thresholds that limit the notification requirements to deals above certain market shares or deal values.  Yet, the filing requirement is suspensory, and notifiable deals must therefore be put on hold until clearance is obtained from the Competition Regulation Committee (or presumably pre-authorisation has been received from the Ministry of Economy).  The period for review permitted under the law is up to 90 days plus a 45-day extension.

Penalties for breaches of the competition regime (items 1 and 2 above) include suspension of business activities and financial fines that range from AED 500,000 to 5 million [>$1.3m] or about 1m euros], with mandatory doubling of fines for recidivists; failure-to-notify mergers may result in similar fines, based on a 2-5% turnover scale or the same AED 500k-5m range, depending on ascertainability of turnover.

Notably, there are several key business segments excluded from the reach of the competition legislation, including SMEs, the financial and oil & gas sectors; telecoms; pharmaceuticals; and the provision of traditionally state-provided or funded activities (e.g., postal services, electricity, water, sewer, etc.).  Whether these rather far-reaching exclusions are in effect throwing the baby out with the bathwater remains to be seen…

The law also provides for a 6-month grace period.  This transitional period for companies to come into compliance, seek a waiver for non-compliance, or face prosecution under the law, will end on 23 August 2013.

Companies doing, or planning to do, business within the UAE may wish to review their existing business practices, market shares, competitive strategies, merger plans, and update their compliance programmes accordingly.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s