Competition Compliance for UAE Businesses

Four prohibitions, no SME exemption, and fines of up to 10% of annual UAE revenue

Federal Decree-Law No. 36 of 2023 on the Regulation of Competition replaced the old Federal Law No. 4 of 2012 and came into force on 29 December 2023. The new law expanded the scope of prohibited conduct, removed several previously available exemptions, introduced two new categories of violation, and increased the maximum fine from AED 5 million to 10% of the offending company's annual UAE revenue. For a company with AED 100 million in UAE turnover, the maximum fine exposure is now AED 10 million per violation.

The Competition Law applies to every business conducting economic activity in the UAE, including branches and representative offices of foreign entities. It also applies to economic activities outside the UAE that affect competition inside the UAE. The definition of "relevant market" now expressly includes digital marketplaces.

• Article 5 prohibits restrictive agreements. Any agreement between two or more undertakings that distorts, lessens, prevents, or restricts competition is prohibited. This covers price-fixing, bid-rigging, market allocation, output restriction, resale price maintenance, and any other arrangement that obstructs a new competitor from entering the market. Agreements can be written or oral, explicit or implicit, public or confidential.
• Article 6 prohibits abuse of a dominant position. An undertaking that holds a dominant position (defined as a market share exceeding 40% in the relevant market, per Cabinet Decision No. 3 of 2025) is prohibited from engaging in conduct that exploits that position. Prohibited conduct includes imposing resale prices, below-cost selling to exclude competitors, discriminating between customers on identical contracts, forcing exclusivity, refusing to deal without justification, tying, and limiting production or supply to create artificial scarcity.
• Article 7 prohibits abuse of economic dependency. This is new. An undertaking that has customers or suppliers with no alternative marketing or supply source is prohibited from exploiting that dependency. This provision targets companies that are not dominant in the overall market but hold a bottleneck position over specific counterparties.
• Article 8 prohibits predatory pricing. Also new. Selling a product or service at a price below its actual cost with the aim of excluding competitors from the market or preventing new entrants is prohibited. General price reductions under the Consumer Protection Law (Federal Law No. 15 of 2020) and liquidation sales of commercial establishments are exempt.
• The old exemptions are gone. The 2012 law exempted "weak impact" restrictive agreements, small and medium enterprises, and listed sectors including telecoms, financial services, utilities, and transport. The new law removes all of these. The only remaining exemptions are for undertakings owned by the federal government (identified by Cabinet decision), undertakings owned by an emirate government operating within that emirate (identified by local government resolution), and sectors where a separate sectoral regulator has specific statutory authority over competition matters.

Who this applies to

This article is for in-house counsel, compliance officers, sales and procurement directors, and business owners at any company operating in the UAE. It applies across all sectors. The Competition Law does not distinguish between large corporations and small businesses. A two-person trading company in a free zone that agrees with a competitor on pricing is as exposed as a multinational conglomerate.

The article complements our earlier piece on competition clearance for mergers and acquisitions, which covers the economic concentration (merger control) provisions of the same law. This article covers the conduct provisions: the day-to-day rules on how a company can and cannot behave in the market.

For companies that operate distribution or franchise networks in the UAE, the restrictions on resale price maintenance, exclusivity, and tying in Articles 5 and 6 require particular attention.

Prohibited agreements (Article 5)

Article 5 prohibits agreements between undertakings that have the object or effect of distorting, lessening, preventing, or restricting competition. The law lists specific prohibited practices, but the list is non-exhaustive.

What counts as a prohibited agreement

The "weak impact" exemption no longer exists

Under the old 2012 law, restrictive agreements with a "weak impact" on competition were exempt. This gave smaller businesses and niche arrangements a degree of protection. The new law removed this exemption entirely. A price-fixing agreement between two small companies with a combined 5% market share is prohibited under the same provisions as a cartel involving market leaders.

The removal of the SME exemption is one of the most practically significant changes. Many UAE businesses, particularly in trading, distribution, and professional services, operate informal understandings with competitors about pricing, territory, or customer allocation. Under the new law, these arrangements are prohibited regardless of the parties' market share.

Notification and exemption

Article 9 allows undertakings to notify the Ministry of Economy of an agreement and apply for an exemption. The Minister may grant an exemption if the agreement contributes to improving production or distribution, promoting technical or economic progress, or achieving benefits for consumers that outweigh the restriction on competition. The exemption may be time-limited and subject to conditions.

The exemption process is designed as a safety valve, not a blanket permission. The burden is on the applicant to demonstrate that the pro-competitive benefits outweigh the harm. The implementing regulations (which remain pending under the new law, with the 2014 regulations still in force) will set out the detailed process.

Abuse of a dominant position (Article 6)

When is a company "dominant"?

Cabinet Decision No. 3 of 2025 sets the threshold: a dominant position exists when an undertaking holds a market share exceeding 40% of total sales in the relevant market, whether acting alone or with other businesses. Holding a dominant position is not prohibited. Abusing it is.

The "relevant market" has two dimensions: the relevant product market (products or services that consumers treat as interchangeable by price, characteristics, and intended use) and the relevant geographic market (the physical or digital area where supply and demand converge under similar competitive conditions). The narrower the market definition, the easier it is for a company to cross the 40% threshold.

Worked example: A Dubai-based building materials supplier. A company supplies 35% of all cement sold in the UAE. It is not dominant under a national market definition. The same company supplies 55% of cement sold in a specific northern emirate where logistics costs limit competition from suppliers based elsewhere. If the Ministry defines the relevant geographic market as that emirate (rather than the UAE as a whole), the company is dominant. Its pricing and commercial practices in that emirate must comply with Article 6.

What conduct is prohibited for a dominant company

Article 6 lists prohibited acts and conduct, including:

• Directly or indirectly imposing prices or conditions for reselling goods or services
• Selling below cost with the aim of excluding competitors from the market or preventing them from continuing their activities
• Discriminating between customers on identical contracts in relation to prices, quality, or terms
• Obliging a customer not to deal with a competing undertaking (exclusivity tied to dominance)
• Refusing to deal on usual commercial terms without justification
• Refusing, limiting, or hindering sales or purchases in a manner that leads to imposing artificial prices
• Tying: making the conclusion of a contract conditional on the acceptance of obligations that, by their nature or commercial usage, have no connection with the subject of the contract
• Limiting production, distribution, or technical development to the prejudice of consumers

The list is illustrative, not exhaustive. Any conduct by a dominant undertaking that exploits its market position to harm competition can fall within Article 6.

Abuse of economic dependency (Article 7)

This is a new prohibition without an equivalent in the 2012 law. Article 7 prohibits an undertaking from exploiting a counterparty's economic dependency. Economic dependency exists where a customer or supplier has no alternative marketing or supply source and is compelled to deal with the undertaking.

The prohibited conduct under Article 7 mirrors elements of Article 6: discriminating between similar contracts, imposing resale prices or conditions, forcing the counterparty not to deal with competitors, refusing to deal on usual commercial terms without justification, and other exploitative practices.

The practical significance is for businesses that control a bottleneck in a supply chain. A company that is the sole authorised distributor of a critical product in the UAE, for example, may not be dominant in the broader market but may hold a position of economic dependency over the retailers and end-users who cannot source the product elsewhere. That company's pricing, exclusivity, and contractual practices are now subject to scrutiny under Article 7 even if it does not meet the 40% threshold for dominance.

For companies that operate exclusive distribution or commercial agency arrangements in the UAE, Article 7 adds a new compliance layer. An exclusive distributor that leverages its position to impose unreasonable terms on downstream buyers may be caught by the economic dependency prohibition even if the product is not dominant in the market overall.

Predatory pricing (Article 8)

Article 8 prohibits selling a product or service at a price below its actual cost when the purpose is to hinder competing undertakings from entering the relevant market, exclude them from it, or inflict losses that prevent them from continuing their activities.

Two exemptions apply: general price reductions conducted in accordance with the Consumer Protection Law (Federal Law No. 15 of 2020), and liquidation sales of commercial establishments. These exemptions recognise that promotional discounting and closing-down sales are normal commercial activities, not predatory conduct.

The predatory pricing prohibition is distinct from the below-cost selling prohibition in Article 6 (which applies only to dominant companies). Article 8 is a standalone provision that applies regardless of the company's market share. A company with 10% market share that prices below cost to drive out a specific competitor can be caught by Article 8 even though it is not dominant.

Practical challenge: proving "actual cost." The law does not define how actual cost is calculated. Whether this means marginal cost, average variable cost, or fully allocated cost will depend on the implementing regulations and future Ministry guidance. Companies accused of predatory pricing should expect disputes over cost allocation methodology.

Penalties

Worked example: penalty exposure for a price-fixing arrangement. Three UAE-based suppliers of industrial equipment agree on minimum pricing. Each has annual UAE revenue of AED 50 million. The Ministry discovers the arrangement through a complaint from a customer. The maximum fine per company is 10% of AED 50 million = AED 5 million. If the violation is repeated (for example, the companies resume the arrangement after being fined), the fine can be doubled to AED 10 million per company. The Ministry can also close each company's UAE operations for up to six months. Total exposure across the three companies: up to AED 30 million in fines plus six months of lost revenue.

Exemptions

An undertaking that believes its agreement or practice, despite being restrictive, produces net economic benefits can apply to the Ministry of Economy for a specific exemption under Article 9. The application must demonstrate that the agreement:

• Improves production or distribution of goods or services
• Promotes technical or economic progress
• Achieves benefits for consumers that outweigh the competition restriction
• Does not eliminate competition in a substantial part of the relevant market

The Minister issues a reasoned decision within 90 days (extendable by 45 days). Exemptions may be time-limited or subject to periodic review. The Minister can revoke an exemption if the conditions are no longer met.

The new law also permits the Cabinet to issue block exemptions for specific categories of agreements that meet general pro-competitive criteria. No block exemptions have been issued yet.

Government-owned entities

The federal government exemption requires a Cabinet resolution identifying the specific undertaking. The emirate government exemption requires a local government resolution. The entity must operate within the emirate. This is narrower than the old law, where government-owned entities benefited from a broader exemption. Companies that assumed government ownership shielded them from competition law should confirm their status under the new regime.

Sectoral exemptions

The old law listed exempt sectors: telecoms, financial services, utilities, transport, and others. The new law removes the sectoral list entirely. A sectoral exemption now applies only where a separate piece of legislation charges a sectoral regulator (such as TDRA for telecoms, CBUAE for banking, or the new CMA for capital markets) with the specific authority to regulate anti-competitive practices in that sector. If the sector regulator does not have express competition law powers, the Ministry of Economy has jurisdiction.

This means that a company in a previously exempt sector (for example, a logistics provider, an insurance company, or a power utility) should review its commercial arrangements for competition law compliance. The blanket exemption no longer exists.

Enforcement: how investigations work

The Ministry of Economy, through its Competition Department and the Competition Regulation Committee, is responsible for investigating anti-competitive practices. Article 18 grants the Ministry broad powers to implement competition policy, investigate complaints, manage a register of notices, and conduct market studies.

The practical enforcement pathway:

Step 1: Complaint or own-initiative investigation. The Ministry can open an investigation following a complaint from a competitor, customer, or other interested party, or on its own initiative based on market intelligence or a sector study. Complaints must be filed on the designated form with supporting documents.

Step 2: Investigation. The Ministry's investigators have the power to request documents, conduct interviews, and inspect business premises. Employees designated by the Minister have law enforcement capacity for the purpose of establishing violations. Obstructing an investigation, withholding information, providing misleading data, or destroying evidence carries a separate fine of AED 50,000 to AED 500,000.

Step 3: Decision. The Ministry issues a reasoned decision. If a violation is found, the Ministry can impose administrative penalties including fines and temporary closure.

Step 4: Grievance and appeal. The entity can file a written grievance within 15 working days of notification. If the grievance is dismissed or not decided within the specified period, the entity can appeal to the competent court within 30 working days.

Step 5: Criminal proceedings. In more serious cases, the Minister can request the initiation of criminal proceedings. This is a discretionary power and is likely to be reserved for cartels, repeated violations, or cases involving obstruction of the investigation.

What businesses should do now

Every company operating in the UAE should take the following steps to align with the new Competition Law:

• Audit existing commercial agreements. Review all distribution, supply, joint purchasing, and industry association arrangements for provisions that fix prices, allocate markets, restrict output, or impose resale price maintenance. Agreements that benefited from the old "weak impact" or SME exemptions must be reassessed. If they contain restrictive provisions, they need to be amended or terminated.
• Assess market position. If the company holds a market share approaching or exceeding 40% in any product or geographic market in the UAE, its pricing, customer terms, exclusivity arrangements, and refusal-to-deal practices must be reviewed against Article 6. The same analysis applies to positions of economic dependency under Article 7, even below the 40% threshold.
• Train sales and procurement teams. The most common competition law violations originate in informal conversations between competitors at trade events, in WhatsApp groups, or during joint purchasing negotiations. Sales teams should be trained on what cannot be discussed with competitors: pricing, costs, margins, customer allocation, capacity, and bidding strategy. A compliance training session costs AED 5,000 to AED 15,000. A price-fixing fine can reach AED 10 million.
• Implement a compliance programme. A written competition law compliance policy, staff training, a reporting mechanism for suspected violations, and periodic audits of commercial arrangements form the core of a programme. The Ministry has not yet issued formal guidance on compliance programme credit (the ability to reduce penalties by demonstrating a pre-existing compliance programme), but international practice suggests that a documented programme can be a mitigating factor.
• Consider proactive notification. If an existing agreement may be restrictive but produces genuine pro-competitive benefits, consider applying for an exemption under Article 9 before the Ministry discovers the arrangement through a complaint or investigation. A proactive approach is always cheaper than a reactive defence.
• Monitor the implementing regulations. The implementing regulations under the new law have not yet been published. The regulations under the old Decree No. 37 of 2014 remain in force in the interim. When the new regulations are issued, they will provide detail on the exemption process, the investigation procedure, the definition of "actual cost" for predatory pricing, and the mechanics of the grievance and appeal process.

How should UAE businesses approach competition compliance in 2026?

The UAE Competition Law is no longer a dormant statute. The introduction of the merger control filing thresholds in March 2025, the expansion of prohibited conduct to include economic dependency and predatory pricing, the removal of the SME and sectoral exemptions, and the increase in maximum fines to 10% of UAE revenue all point in the same direction: the Ministry of Economy intends to enforce.

The businesses that will face the steepest exposure are the ones that assumed the old regime would persist, that relied on the "weak impact" exemption to justify informal pricing arrangements, or that treated the Competition Law as a concern only for large corporations. Under the new law, every company, in every sector, at every size, is within scope.

For companies reviewing their competition law exposure, our corporate legal team advises on agreement review, compliance programme design, dominance assessment, exemption applications, and Ministry interactions.

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