Business Aspects in UAE: Merger Control and Competition Law

United Arab Emirates (UAE) is a suitable destination for foreign investors and entrepreneurs, as the economy of the country is booming. Additionally, business properties are also discovered in primary locations to attract customers and investors. However, the latest business laws in UAE have flexible terms and conditions for international investors. Several ease are created for international businesses and entrepreneurs in revised UAE Law. They do not need a UAE national to register their business, as they can get 100% ownership. It opens the door for all the investors from all over the world.

When starting a business in the UAE, it is essential to understand business growth and compliance. There are two main business aspects in the UAE and those are “Merger Control” and “Competition Law”. These aspects can create a competitive market where consumer interests are protected, and fairness is ensured in businesses.

The UAE’s economy is booming in several sectors, such as technology, real estate, oil and gas, facility management, hospitality, port, trade, services and several other block-chain financial matters. It has become one of the largest business hubs in the world and there is no doubt while saying. Looking at UAE’s economic situation, its diverse culture and multiple businesses encourage innovation in the business environment. In addition, the UAE business laws are regulated by federal and local laws. Consequently, federal laws govern free zone areas, and competition and mergers occur in Dubai and Abu Dhabi. All businesses in the UAE must follow the Federal Law of Regulation of Competition to regulate competition law in the country.

The competition law in the UAE intends to promote a competitive market, avoid monopolies in businesses, and protect consumer rights. The law is governed by the Ministry of Economy, which oversees businesses and takes legal action against violations in the business environment. It is always very important for an economy to promote a healthy competition in the market, remove monopolies and discriminations and encourage the investment in country.

Let’s take a wider look at the objectives of the UAE competition law:

Prevention of Business Dominations

The law ensures a zero monopolistic approach in business so businesses can run their operations fairly.

Encouraging Businesses

In competition law, business sizes do not matter. Any business can enter the business world and run it efficiently.

Protecting Consumers

The law ensures that consumers get competitive pricing and quality, which protects their rights.

Restricted Practices

Several practices are prohibited by the competition law in the UAE, we can mention a few of them for your knowledge and understanding:

Price Concentration

Businesses cannot manipulate prices by increasing, decreasing, or stabilising them. Prices must always remain competitive.

Prohibition for Market Allocation

The markets shall not be divided by territory, client base, or product lines.

Bid Rigging

The collaborative schemes are forbidden to manipulate the outcomes of the tender processes.

Abuse of Dominant Position

Companies that are significant in the market are prohibited from misusing their power, such as imposing exclusive agreements and desirous pricing.

Merger control in the UAE is essential to the UAE’s competition law. It ensures that mergers and acquisitions (M&A) do not negatively impact market competition. However, companies planning to merge or acquire other businesses must comply with the UAE competitive law.

What is a Merger?

When two or more companies want to be known as one entity to control the market, they form a merger. Different mergers are created in the UAE, such as joint ventures.

Requirements for Merger

Businesses that plan to merge in the UAE must inform the Ministry of Economy. The notification shall include the following details:

• Information about the merging parties
• Market share of each business party involved
• Impact on the market competition

If the companies do not notify the Ministry of the merger, they will face severe consequences, such as heavy fines in the UAE.

How Does the Ministry of Economy Assesses Mergers?

The Ministry of Economy must ensure mergers comply with UAE business laws. These mergers are based on:

• Combined market share of the merging parties
• Effect on competition and market entry
• Benefits to consumers in terms of innovation and efficiency

Certain practices can be exempted from the UAE’s competition law. However, these exemptions ensure that it does not affect the industries and national priorities in the UAE:

Exemptions to Sectors

Some sectors do not have to follow the competition law because they are important to the UAE economy in a larger sense. These sectors include telecommunications, oil and gas, and defense.

Exemptions for Economic Development

Agreements and practices that contribute to economic development in the UAE are exempt from competition law provisions.

Small and Medium Enterprises (SMEs)

The UAE has encouraged start-ups to pursue their entrepreneurial journeys in the UAE; therefore, they are exempt from competition law.

Penalties for Violating the UAE Business Laws

The Ministry of Economy is authorized to penalize businesses that violate the competition law or the merger control, especially if they do not come under exempted sectors or are part of start-ups in the UAE. The enforcement of penalties is based on the investigations and proofs of violations. However, heavy penalties have to be paid by the businesses, and mergers that have affected the market competition have to be reversed.

Businesses are advised to seek legal advice to ensure compliance and minimize the risks involved.

Understanding competition law and merger control is essential for an individual while entering into the business world. There are certain implications to operating a business in the UAE:

Administrating the M&A Activities

Companies must ensure mergers and acquisitions are handled carefully and compliant with the market share.

Fair Business Practices

Businesses must review their pricing strategies and agreements to prevent anti-competitive practices in the UAE business environment.

Uplifting Exemptions

Companies working in specific sectors that have majorly contributed to the UAE’s economic development shall comply with other UAE business rules and regulations.

Ensuring Compliance

Regular audit reports ensure that business activities are operated per UAE laws and that penalties can be prevented.

With the advancement in the UAE corporate laws, where it has challenges, there are benefits too:

Market is Stability: Its should be stable always

Monopolistic business approaches will be prevented as everyone has to keep up with competitive pricing and dealings.

Gain the Trust of the Consumers

Ensuring that price and quality are competitive

Encouraging Innovation

Businesses can innovate and choose their incentives to ensure the quality of their goods and services.

International Standing of the UAE

The international standards can be reinforced in the UAE as it is an attractive location for many businesses.

The UAE is a great country for businesses to start. Several ideas have been generated in Dubai and Abu Dhabi. However, the UAE banks have also offered loans to green initiatives for sustainability. Starting your entrepreneurial journey in the UAE would be an amazing experience. You are also exempted from taxes and other rules if you set up a business in the freehold locations.

If you plan to do business in the UAE, you must hire legal services to ensure business compliance. Without a lawyer, it isn’t easy to set up a business. The legal consultants will oversee your intellectual property and other legal aspects of the business. You can have foreign ownership in the UAE, but the lawyer will have to guide you about the registration of your business and how you can work according to the business laws.