Federal Law No. (4) of 2012 On the Regulation of Competition

 

Preamble

We, Khalifa bin Zayed Al Nahyan, President of the United Arab Emirates,

Having perused the Constitution;

Federal Law No. (1) of 1972 On the Jurisdiction of Ministries and Powers of Ministers, as amended;

Federal Law No. (5) of 1975 On the Commercial Register;

Federal Law No. (4) of 1979 On the Suppression of Fraud and Deception in Commercial Transactions;

Federal Law No. (10) of 1980 On the Central Bank, the Monetary System, and Regulating the Banking Profession, as amended;

Federal Law No. (18) of 1981 Regulating Commercial Agencies, as amended;

Federal Law No. (8) of 1984 on Commercial Companies*, as amended;

*  Abrogated by Federal Law No. (2) of 2015 On Commercial Companies

Civil Transactions Law promulgated by virtue of the Federal Law No. (5) of 1985, as amended;

Federal Law No. (6) of 1985 on Banks, Financial Institutions, and Islamic Investment Companies;

Penal Law promulgated by virtue of the Federal Law No. (3) of 1987, as amended;

Evidence in Civil and Commercial Transactions Law promulgated by virtue of the Federal Law No. (10) of 1992, as amended;

Civil Procedure Law, promulgated by virtue of the Federal Law No. (11) of 1992, as amended;

Criminal Procedure Law, promulgated by virtue of the Federal Law No. (35) of 1992, as amended;

Federal Law No. (37) of 1992 On Trademarks, as amended;

Federal Law No. (9) of 1993 On Controlling Trade in Precious Stones and Metals and Stamping;

Commercial Transactions Law promulgated by virtue of the Federal Law No. (18) of 1993;

Federal Law No. (4) of 2000 On the UAE Securities and Commodities Authority and Market, as amended;

Federal Law No. (28) of 2001 on Establishing the Emirates Specifications and Metrology Authority as amended;

Federal Law No. (7) of 2002 On Copyrights and Neighboring Rights, as amended;

Federal Law No. (17) of 2002 On the Regulation and Protection of Industrial Property for Patents and Industrial Drawings and Patterns, as amended;

Decree Federal Law No. (3) of 2003 Regulating the Telecommunications Sector, as amended;

Federal Law No. (8) of 2004 On Financial Free Zones;

Federal Law No. (1) of 2006 On Electronic Transactions and Commerce;

Federal Law No. (24) of 2006 On Consumer Protection;

Federal Law No. (6) of 2007 On the Establishment and Organizing the Functions of the Insurance Authority; and

Based on the proposal of the Minister of Economy, the approval of the Council of Ministers and the Federal National Council, and the ratification of the Higher Council of the Union, 

Promulgate as follows:

 

 

Chapter I

 

Article (1) Definitions 

In this Law, the following words and expressions shall have the meanings assigned next to them unless the context otherwise requires:

UAE: United Arab Emirates;

Ministry: Ministry of Economy;

Minister: Minister of Economy;

Competent Authority: The competent local authority;

Sectoral Regulatory Bodies: Federal or local bodies empowered by virtue of their respective regulations to regulate, control, or supervise a certain economic sector in the UAE;

Competition: Practicing economic activities according to the market mechanisms without such mechanisms having any adverse impact on or limitation to commerce and development.

Organization: Any natural or legal person practicing an economic activity, any person associated therewith, or any combination of these persons, regardless of its legal form.

Relevant Market: Commodity or service, or a combination of commodities or services, which, based on their price, characteristics, and methods of use, may be replaced with any other goods or services, or the alternatives of which may be chosen, to meet a specific requirement of consumers in a certain geographical area.

Agreements: Agreements, contracts, arrangements, joint ventures, or practices between two or more organizations, or any cooperation among organizations, or the decisions made by a syndicate of organizations, whether orally or in writing, expressly or implicitly, secretly or in public.

Dominant Position: A position that enables any organization to control, individually or collectively with other organizations, or affect the Relevant Market.

Economic Concentration: Any act that results in a whole or partial transfer (merger or acquisition) of title or usufruct of property, rights, shares, stocks, or obligations of an organization to another organization which would enable an organization or a group of organizations to have direct or indirect control over an organization or a group of other organizations.

Committee: Competition Regulation Committee formed under this Law. 

 

 

Chapter II. Objectives of the Law

 

Article (2) 

This Law aims to protect and promote competition and anti-monopoly practices through the following:

1) Providing a stimulating environment for Organizations to enhance efficiency, competitiveness and consumer interest and achieve sustainable development in the UAE.

2) Maintaining a competitive market governed by market mechanisms, in accordance with the principle of economic freedom, by prohibiting restrictive Agreements, prohibiting the acts and behaviors that lead to the abuse of a Dominant Position, controlling Economic Concentration operations, and avoiding anything that would endanger, limit or prevent Competition.

 

 

Chapter III. Applicability

 

Article (3) 

The provisions of this Law shall apply to the economic activities carried out by the Organizations in the UAE and to the exploitation of intellectual property rights inside and abroad the UAE. This Law shall also apply to the economic activities which are practiced abroad the UAE and affect competition in the UAE.

 

Article (4) 

The provisions of this Law shall not apply to: 

1) The sectors, activities and works set out in the Appendix to this Law. The Council of Ministers may delete or add any sectors, activities or works to these exclusions.

2) The acts undertaken by the Federal Government or one of the UAE governments, and the acts of the Organizations carried out based on a decision or authorization by the Federal Government or one of the UAE governments, or under the supervision of any of them, including the acts of the Organizations owned or controlled by the Federal Government or any of the UAE governments according to the controls prescribed by the Council of Ministers. 

3) Small and medium-sized Organizations in accordance with the controls prescribed by the Council of Ministers.

 

 

Chapter IV. Anti-Competition Practices

 

Article (5) Restrictive Agreements 

1. Agreements which have as their subject or objective the abuse, restriction or prevention of competition shall be prohibited, in particular, the agreements that aim to:

a) fixing, directly or indirectly, purchase or sale prices of goods or services by causing an increase, reduction, or fixing of prices, thereby adversely affecting Competition.

b) determining the terms and conditions of sale, purchase, or performance of services or any similar transaction.

c) collusion in bids or proposals in tenders, practices, and other supply offers.

d) freezing or limiting production, development, distribution or marketing, and other investment aspects.

e) conspiracy not to purchase from certain organization or organizations, limiting sale or supply to certain organization or organizations, and preventing or obstructing its/their ability to carry out its/their business.

f) restricting the freedom of supply of goods or services to the Relevant Market, or removing goods or services from the Relevant Market, including hiding or unlawfully storing goods or services, abstaining from dealing in goods and services, or creating a sudden oversupply that leads to circulating the goods and services at fake prices.

2. Subject to the provisions of the above Federal Law No. (18) of 1981, restrictive Agreements among Organizations, which prejudice, restrict, or prevent Competition, shall be prohibited, including the agreements that are aimed at:

a) market sharing, or allocation of clients on the basis of geographical areas, distribution centres, customer quality, seasons, periods of time, or any other basis that adversely affects Competition.

b) taking any measures to obstruct the entry of any Organizations to the market, excluding any Organizations from the market, or obstruction of accession to any existing agreements or joint ventures.

3. Save for Sub-clause (a), Clause 1, and Sub-clause (a), Clause 2, the provisions of this Article shall not apply to low-impact agreements in which the total share of the Organizations which are parties to these agreements do not exceed the percentage set by the Council of Ministers of the total transactions in the Relevant Market. The Council of Ministers, based on the proposal of the Minister, may increase or reduce this percentage according to the economic situation requirements.

 

Article (6) Abuse of a Dominant Position 

1. No Organization of a Dominant Position in the Relevant Market, or in a substantial or influential part thereof, may carry out any acts or actions that lead to the abuse of this position in order to prejudice, restrict, or prevent Competition, particularly those which have the following subjects or objectives:

a) directly or indirectly imposing prices or conditions for resale of goods or services;

b) selling goods or performing services at below cost price with the aim of obstructing the entry of competitive Organizations to the Relevant Market, excluding them, or exposing them to losses that make it hard for them to continue their business;

c) unjustified discrimination of customers of identical contracts in terms of prices of goods and services, or the terms of sale or purchase contracts;

d) forcing a customer not to deal with a competitive Organization.

e) rejection, in whole or in part, of dealing under the usual commercial terms.

f) unjustified abstention from selling or purchasing goods and services, or reducing or obstructing this dealing, thereby imposing a false price.

g) making the conclusion of a sale or purchase contract or agreement for goods or services conditional on the acceptance of obligations for dealing with other goods or services which by nature or under commercial use are unrelated to the subject of the original dealing or agreement.

h) disseminating, knowingly, false information about the products or their prices.

i) increasing or decreasing the available quantities of the product, thereby creating a forced deficit or oversupply of the goods in question.

2. The Dominant Position referred to in Clause 1 of this Article is realized when the share of any Organization exceeds the percentage prescribed by the Council of Ministers of the total transactions in the Relevant Market.

The Council of Ministers, upon a proposal by the Minister, may increase or decrease this percentage based on the economic situation requirements. 

 

Article (7) 

1. Based on the recommendation of the Committee, the Minister shall make a decision to exclude the restrictive Agreements or the practices relevant to a Dominant Position from the provisions of Articles (5) and (6) of this Law, subject to the following conditions:

a) The relevant Organizations shall notify the Ministry of these Agreements in advance according to the form prepared for this purpose and shall attach the documents prescribed by the Executive Regulation of this Law.

b) The relevant Organizations shall prove that these restrictive Agreements or the practices relevant to a Dominant Position would enhance economic development, develop the performance of Organizations or their competitive ability, develop production or distribution systems, or realize certain benefits to the consumers.

c) The Ministry should be notified of any amendments to the restrictive Agreements or the practices relevant to a Dominant Position for which an exception was obtained within thirty days from concluding the draft.

2. The Executive Regulation of this Law shall determine the controls related to notifications and the documents that should be attached to the exclusion application.

3. The Executive Regulation of this Law shall identify the organizational unit concerned with the implementation of the provisions of this Law. 

 

Article (8)

1. The Minister shall make its decision referred to in Clause 1 of Article (7) of this Law within ninety days, which may be extended to forty-five days from the date of receiving the notice that satisfies the required conditions. If no decision is issued by the Minister within this period, this shall be considered an implicit acceptance of these restrictive Agreements or the practices relevant to a Dominant Position.

2. The Minister may approve, temporarily and for no more than thirty days, the enforcement of the restrictive Agreements or the practices relevant to a Dominant Position until his final decision thereon is issued. 

3. Upon completion of the formal examination of the application and its supporting documents, the Ministry shall issue a notice of the completion of the formal requirements of the application.

4. The Ministry shall examine the application to ensure that the Organizations or the Agreements satisfy the conditions set out in Sub-clauses (a) and (b), Clause 1, of Article (1) of this Law. 

5. The Minister may determine the period of the exclusion granted under this Article or make it subject to periodic review.

6. The Minister may make a reasoned decision on the notifications submitted under the provisions of Article (7) of this Law as follows:

a) approve or reject the restrictive Agreements or the practices relevant to a Dominant Position, as amended; or

b) approve the enforcement of restrictive Agreements or the practices relevant to a Dominant Position, as amended, provided that the relevant Organizations comply with the conditions and obligations established by the Minister for this purpose. 

7. The Minister may issue a resolution to cancel the approval in any of the following events:

a) If it transpires that the circumstances under which the approval was granted no longer exist.

b) If the relevant Organizations fail to satisfy the conditions and requirements based on which the approval was granted.

c) If it transpires that the information based on which the approval was granted was misleading or false.

 

 

Chapter V. Economic Concentration

 

Article (9)

1. In order to complete the Economic Concentration operations in which the total share of the Organizations involved in these operations exceeds the percentage set out by the Council of Ministers of the total transactions in the Relevant Market, which may affect the Competition level in the Relevant Market, particularly creating or promoting a Dominant Position, the relevant Organizations shall apply to the Ministry at least thirty days before the completion of these operations, according to the form prepared for this purpose and shall attach the required documents with the application. 

2. The Council of Ministers, upon the proposal of the Minister, may increase or reduce the Economic Concentration percentage set out in Clause 1 of this Article according to the Economic Concentration requirements.

3. The Executive Regulation of this Law shall set out the controls related to the Economic Concentration application and the documents to be attached to the application.

 

Article (10) 

1. The Ministry shall verify that the Economic Concentration operations set out in Article (9) of this Law are in line with the procedures prescribed by the Executive Regulation of this Law.

2. The Minister shall make his decision referred to in Article (9) of this Law within ninety days, which may be extended to another forty-five days from the date of receiving the completed application that satisfies the required conditions. Within this period, the relevant Organizations shall not carry out any actions or procedures to complete the Economic Concentration operations. If no decision is made by the Minister within this period, the Economic Concentration operations shall be deemed to have been approved implicitly. 

3. The Ministry may request additional information related to the Economic Concentration process.

 

Article (11) 

1. The Minister may make a reasoned decision concerning the applications filed under Articles (9) and (10) of this Law as follows:

a) Approving the Economic Concentration process if it has no adverse impact on Competition or if it has positive economic effects that exceed any negative effects on Competition.

b) Approving the Economic Concentration process, provided that the relevant Organizations undertake to implement the conditions and obligations determined by the Minister for this purpose.

c) Rejecting the Economic Concentration.

2. The Minister shall make a decision to cancel the approval referred to in Clause 1 of this Article in any of the events referred to in Clause 7 of Article (8) of this Law.

 

 

Chapter VI. Competition Regulation Committee

 

Article (12) 

A committee called “Competition Regulation Committee” shall be formed under this Law. The Committee shall be chaired by the Undersecretary of the Ministry of Economy. A decision shall be made by the Council of Ministers concerning the formation of the Committee, regulating its work system, the term of membership in the Committee, and the remuneration of its members. 

 

Article (13) 

The Competition Regulation Committee shall have the following mandates:

1) Proposing the policy for the protection of Competition in the UAE.

2) Considering the issues related to the implementation of the provisions of this Law, and raising recommendations thereon to the Ministry.

3) Proposing legislation and procedures related to the protection of Competition and presenting such legislation and procedures to the Minister.

4) Examining the applications presented to the Committee for reconsideration of the decisions made by the Minister within no more than ten days from the date of being notified of the decision.

5) Making recommendations to the Minister on the exclusion of restrictive Agreements or the practices relevant to a Dominant Position.

6) Preparing an annual report on the Committee activities to be presented to the Minister.

7) Any other matters related to the protection of Competition which are referred to the Committee by the Federal authorities or the competent authorities in the UAE.

 

 

Chapter VII. Mandates of the Ministry in the Competition Field 

 

Article (14) 

The Ministry shall have the following mandates related to Competition affairs:

1) Implementing the Competition policy in cooperation with the competent authorities in the UAE.

2) Coordinating with the competent authorities in the UAE to address any form of activities or practices violating the provisions of this Law.

3) Preparing the forms and applications related to the performance of its duties and designating a record for notifications and complaints.

4) Soliciting information and investigating the practices violating Competition, based on complaints or on its own motion, addressing these practices in cooperation with the Competent Authorities and making recommendations to the Minister on the decisions to be taken in this regard to take the appropriate action.

5) Receiving applications for reconsideration of the decisions made under this Law and taking the appropriate actions concerning these applications.

6) Conducting studies related to Competition in the markets, preparing reports and providing information to the public.

7) Receiving and following-up the notifications of restrictive Agreements or the practices relevant to a Dominant Position, as amended, and Economic Concentration applications.

8) Retaining experts or consultants from outside the Ministry to perform any works that fall within its mandates.

9) Promoting an exchange of information with the authorities concerned with Competition in other countries in order to fulfil the purposes of and implement this Law.

10) Taking measures and procedures to disseminate the culture of Competition and free market principles.

11) Conducting the Executive Secretariat works of the Competition Regulation Committee.

12) Any other tasks related to Competition referred to the Committee by the Council of Ministers.

 

Article (15) 

1. In performing its duties, the Ministry shall:

a) Take adequate procedures to ensure the confidentiality of the information to which the Ministry have access or which are provided to the Ministry by business incorporations, the disclosure of which may cause substantial damage to the commercial interests of the business enterprises or their owners, or which may conflict with the public interest.

b) Not disclose the information which the Ministry has access to except to the concerned parties or upon request of the Competent Authorities.

2. The Committee shall comply with the obligations of the Ministry set out in this Article.

 

 

Chapter VIII. Penalties

 

Article (16) 

Any Organization that violates the provisions of Articles (5) and (6) of this Law shall be punished by a fine of no less than AED 500,000 (Dhs. Five Hundred Thousand) and no more than AED 5,000,000 (Dhs. Five Million).

 

Article (17) 

Any Organization that violates the provisions of Article (9) of this Law shall be punished by a fine of no less than 2% and no more than 5% of the annual sales volume of goods or service revenues, the subject of violation, which was realized by the violating Organization in the UAE during the last preceding financial year, or by a fine of no less than AED 500,000 (Dhs. Five Hundred Thousand) and no more than AED 5,000,000 (Dhs. Five Million), if it is not possible to determine the total sales or revenues volume, the subject of violation.

 

Article (18) 

Any Organization that violates the provisions of Clause 2, Article (10), of this Law shall be punished by a fine of no less than AED 50,000 and no more than AED 500,000 (Dhs. Five Hundred Thousand).

 

Article (19)

Any Organization that violates the provisions of Article (15) of this Law shall be punished by a fine of no less than AED 50,000 (Dhs. Fifty Thousand) and no more than AED 200,000 (Dhs. Two Hundred Thousand).

 

Article (20) 

Any Organization that violates any other provision of this Law and its Executive Regulation shall be punished by a fine of no less than AED 10,000 (Dhs. Ten Thousand) and no more than AED 100,000 (Dhs. One Hundred Thousand).

 

Article (21) 

The penalties prescribed for the crimes set out in this Law shall be aggravated in the event of recurrence.

 

Article (22) 

The court, in the event of conviction, may order the closure of the Organization for no less than three months and for no more than six months, and may order the publication of its decision once or more in at least two local daily newspapers at the expense of the violating Organization.

 

Article (23) 

1. The penalties set out in this Law shall not prejudice any more aggravated penalties set out in any other law.

2. The penalties set out in this Law shall not prejudice the right of the harmed party to have recourse to the court to claim compensation for the damage arising from violating any provision of this Law.

 

Article (24) 

Competition cases shall be considered on a summary basis and the competent court may render a decision to suspend or prevent any act until a final decision is rendered.

 

 

Chapter IX. General and Closing Provisions

 

Article (25)

Any concerned party may file a complaint with the Ministry concerning any violation of this Law according to the controls set out by the Executive Regulation of this Law and the resolutions issued in implementation of this Law.

 

Article (26) 

Save as prescribed in Article (19) of this Law, the criminal case for the crimes set out in this Law may commence only by a written request by the Minister or his authorized deputy.

The Minister, or his authorized deputy, may effect reconciliation in respect of any of these acts before referring the criminal case to trial in consideration for payment of any amount that is not less than double the minimum penalty.

The Executive Regulation shall set out the reconciliation controls. 

 

Article (27) 

The decisions made by the Minister under the provisions of this Law may be appealed to the competent court within sixty days from the date of notifying the concerned parties of such decisions.

 

Article (28) 

The employees who are designated by a resolution by the Minister of Justice, in agreement with the Minister and the Competent Authority, shall act as law enforcement officers to identify the violations of the provisions of this Law, and the regulations and resolutions issued in implementation thereof, within their respective competence.

 

Article (29) 

The Ministry shall coordinate the implementation of the provisions of this Law with the Competent Authorities and the Sectoral Organizational Bodies.

 

Article (30) 

The Organizations existing at the time of enforcing this Law shall rectify their conditions according to its provisions within no more than six months from the date of its enforcement.

 

Article (31) 

Any provision that violates or contradicts the provisions of this Law shall be repealed.

 

Article (32) 

The Council of Ministers shall issue the Executive Regulation of this Law and the necessary resolutions for the implementation of its provisions within one month from its enforcement date.

 

Article (33) 

This Law shall be published in the Official Gazette and shall come into force within four months from the date of its publication.

 

Khalifa bin Zayed Al Nahyan

President of the United Arab Emirates

 

Issued in the Presidential Palace at Abu Dhabi

On 10 October 2012

Corresponding to 24 Thu Al-Qidah 1433 H

 

 

Annex. Sectors, Activities and Businesses Excluded from the Provisions of the Federal Law No. (4) of 2012 on the Regulation of Competition

The provisions of this Law shall not apply to any agreement, practice, or business that is related to a particular commodity or service, the regulation of the competition rules of which are granted by another law or regulation to sectoral organizational bodies, unless these sectoral organizational bodies apply to the Ministry in writing to undertake this issue in whole or in part and the Ministry approves this application. These exclusions shall include the following sectors, activities and services:

a) Telecommunications sector.

b) Financial sector.

c) Cultural activities (printed, audio, visual).

d) Oil and gas sector.

e) Production and distribution of pharmaceutical products.

f) Mail services including courier services.

g) Activities related to the production, distribution and transmission of electricity and water.

h) Activities related to sewage, garbage disposal, sanitation and similar activities, in addition to environmental services supporting such activities.

i) Land, sea and air transport sectors, transport by rail and related services.