Navigating Federal Decree-Law No. 36 of 2023 on the Regulation of Competition

The United Arab Emirates has firmly established itself as a global economic powerhouse and an attractive hub for multinational business operations, direct foreign investment, and ground-breaking commercial enterprise. Central to sustaining this dynamic and attractive business landscape is the implementation of a robust, modern, and transparent regulatory ecosystem designed to foster fair market conditions. Under the direct guidance of Adv. Ibrahim Khaleel, a distinguished legal professional with over 15 years of deep expertise in the UAE legal landscape, DubaiAdvocates.ae provides top-tier statutory insights into the nation’s rapidly progressing regulatory matrix.

A monumental shift occurred with the enactment of Federal Decree-Law No. 36 of 2023 on the Regulation of Competition, which officially repealed the older statutory framework under Federal Law No. 4 of 2012. This legislative overhaul fundamentally modernizes how the nation supervises restrictive agreements, controls market-altering economic concentrations, and curbs the abuse of dominant market positions across all local markets, including digital environments. Backed by the newly ratified Cabinet Resolution No. 59 of 2026 concerning the Executive Regulations of the Competition Law, businesses operating across Dubai, Abu Dhabi, and the wider UAE must proactively re-evaluate their transactional practices and structural frameworks to align with these stringent regulatory mandates.

The Scope and Objectives of the UAE Free Market Protection Framework

The principal objective of Federal Decree-Law No. 36 of 2023 is to safeguard and promote an investment-friendly commercial environment governed by market mechanisms in line with the overarching principle of economic freedom. By establishing crystal-clear parameters, the law actively combats monopolistic practices, prevents artificial inflation or suppression of prices, and enhances general consumer welfare.

The geographical and legal scope of this updated statutory framework is expansive. It applies directly to:

• All economic activities practiced inside the state of the United Arab Emirates.
• The exploitation of intellectual property rights both inside and outside the UAE.
• Economic activities conducted outside the borders of the UAE that have a direct, measurable, or intended effect on market dynamics or free trade within the State.

Crucially, the updated legal framework eliminates several blanket exclusions found under the previous 2012 law, notably removing automatic carve-outs for small and medium-sized enterprises (SMEs). This ensures that almost every private corporate vehicle, irrespective of its legal structure, size, or capitalization, is bound to maintain fair market behavior. The law explicitly encompasses modern digital marketplaces, reflecting the country’s progressive alignment with global antitrust standards, such as those observed within the European Union.

Prohibitions on Restrictive Agreements Under UAE Statutory Law

Under Article 5 of Federal Decree-Law No. 36 of 2023, horizontal and vertical agreements between market participants that have the intent, object, or effect of distorting, lessening, preventing, or restricting market balance are strictly prohibited. These anti-competitive alliances undermine economic stability and violate federal compliance protocols.

The law categorically highlights specific forbidden practices, including:

• Direct or indirect price-fixing, price-reduction, or price-manipulation strategies that run contrary to standard market forces.
• Collusive tendering, bid-rigging, or coordinated offers within public or private auctions and supply tenders.
• Imposing artificial constraints on manufacturing volumes, market distribution networks, technical development, or capital investments.
• Market allocation or customer segmentation based on geographical locations, distribution centers, seasons, or demographic profiles.
• Coordinated boycotts or collusive refusals to deal with specific market undertakings to obstruct their standard business operations.

Corporate entities must carefully audit their distribution agreements, joint venture pacts, and trade association involvements to guarantee they do not inadvertently enter into configurations that could be legally construed as restrictive or anti-competitive.

Abuse of a Dominant Position in the Modern Marketplace

Market dominance itself is not an infraction under UAE statutory law; however, the abuse of that dominant position to stifle fair play is met with severe regulatory penalties. Under Article 6 of the updated Decree-Law, any corporate undertaking that possesses a dominant market share or holds an influential position in a relevant market sector is strictly prohibited from exploiting that power to distort or eliminate open competition.

Statutory examples of abusive market behavior include:

• Directly or indirectly forcing unfair resale prices or non-negotiable trading conditions onto distributors or buyers.
• Engaging in predatory pricing by selling goods or providing services below actual production and marketing costs with the explicit intent of driving competitors out of business or blocking new entrants.
• Unjustifiably discriminating between similar commercial buyers regarding pricing, product quality, or contractual terms for identical transactions.
• Forcing exclusive-dealing clauses that legally compel a client or consumer not to transact with a competing supplier or brand.
• Refusing to transact or supply goods on standard commercial terms without a legitimate, verifiable, and objective commercial reason.
• Unjustifiably blocking or preventing competing market participants from accessing essential private networks, digital portals, physical logistics networks, or infrastructure when such infrastructure represents the only viable path to executing an economic activity.

Structural Controls on Economic Concentrations and Mergers

One of the most consequential changes introduced by Federal Decree-Law No. 36 of 2023 is the thorough reconstruction of the merger control regime, often legally referred to as the control of economic concentrations. An economic concentration occurs when any transaction leads to a total or partial transfer of asset ownership, stock allocations, user data, or corporate management controls, effectively enabling an entity to exercise direct or indirect influence over a market sector.

The updated framework significantly alters the operational workflow for corporate mergers and acquisitions (M&A):

Exemptions, Carve-Outs, and Statutory Exclusions

While the reach of Federal Decree-Law No. 36 of 2023 is broad, the law recognizes certain necessary exemptions to protect macro-economic stability and specialized state assets. Under Article 4, specific entities and agreements are explicitly excluded from the application of these strict antitrust provisions.

State-Owned Enterprises (SOEs)

Undertakings completely owned or directly controlled by the UAE Federal Government, or by the local government of any individual Emirate, are exempt from these provisions. This exclusion must be formally sanctioned via specific resolutions issued by the UAE Cabinet or the relevant local executive council.

Sector-Specific Statutory Carve-Outs

The law explicitly provides an exemption for agreements, practices, or structural transactions related to specific sectors, goods, or services that are already heavily regulated by standalone, sector-specific federal or local legislation. However, for this exemption to apply, the alternative specialized law must contain explicit provisions to independently govern, approve, and oversee antitrust matters and mergers within that specific economic sector (e.g., specific banking, telecommunications, or energy frameworks).

Navigating Regulatory Jurisdictions: Mainland, DIFC, and ADGM

When addressing market protection disputes, clarity regarding jurisdictional boundaries across the UAE is vital. For standard mainland commercial entities operating within the wider geographical borders of the state, regulatory oversight is executed directly by the federal Ministry through its dedicated Competition Department and the Competition Regulation Committee. Legal challenges or appeals against final administrative decisions originate within the specialized circuits of the mainland UAE Courts and the Dubai Courts.

Conversely, the UAE is home to premier financial free zones that operate under independent common law jurisdictions. The Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) maintain their own independent courts, civil judiciaries, and regulatory systems:

• The DIFC Courts and the Dubai Financial Services Authority (DFSA) manage corporate behavior and transactions originating exclusively within the geographical and legal confines of the DIFC.
• The ADGM Courts and the Financial Services Regulatory Authority (FSRA) perform the same standalone judicial functions within Al Maryah Island in Abu Dhabi.

However, where an economic entity established within a free zone engages in commercial transactions that cause an anti-competitive impact or create an economic concentration affecting mainland markets, the federal laws administered by the Ministry remain applicable to protect the integrity of the national economy.

Administrative Penalties and Enforcement Mechanisms

The enforcement mechanisms under the updated statutory framework have been significantly strengthened to ensure strict market discipline. The Ministry, supported by local economic departments, possesses expansive powers to investigate anti-competitive behavior, execute sudden marketplace audits, and subpoena corporate records.

Failing to comply with the statutory clearance mandates or violating the core prohibitions against restrictive agreements and dominant position abuse exposes an offending corporate entity to heavy financial penalties. Specifically, if a transaction requiring mandatory economic concentration clearance is executed without a formal filing, the violating parties can be fined an amount ranging from 2% to 10% of the total annual revenues generated by the relevant product or service in the preceding fiscal year.

Where calculating annual revenue is not mathematically feasible or missing due to accounting gaps, the law provides for alternative statutory fines reaching up to several million UAE Dirhams. Furthermore, the authorities reserve the legal right to order a complete shutdown of corporate facilities, invalidate underlying contracts, and publish names of violating entities on public registers.

Key Commercial Scenarios and Compliance Assessments

To help businesses protect themselves against unintended structural violations, our corporate advisory team evaluates several common compliance scenarios:

Scenario A: Assessing Joint Venture Distribution Models

Two competing manufacturing entities established in Dubai intend to sign a joint distribution agreement to cut down on domestic logistics costs. If this agreement includes clauses that fix minimum resale prices across local retail outlets, or partitions the Dubai market into exclusive North/South operational zones, it directly violates Article 5 of the Decree-Law. It requires immediate restructuring to remove price-fixing attributes before implementation.

Scenario B: Foreign M&A with Local Subsidiaries

An international tech conglomerate is acquiring a European software business. Both entities possess local, wholly owned subsidiary branches in Dubai and Abu Dhabi. Although the transaction is signed outside the country, if the combined local or global market turnover triggers the statutory limits set under Cabinet Resolution No. 59 of 2026, the transaction cannot safely close globally until a formal economic concentration filing has been submitted and approved by the Ministry at least 90 days prior.

Scenario C: Exclusive Digital Platform Onboarding

An expanding e-commerce marketplace platform in Dubai mandates that any local merchant onboarding onto its platform must sign an exclusivity clause preventing them from listing their items on any other domestic digital application. If the platform holds a dominant market position, this requirement constitutes an abuse of dominance under Article 6, exposing the digital platform to multi-million Dirham fines.

The Role of DubaiAdvocates.ae Lawyers and Legal Consultants

Navigating the complexities of modern antitrust legislation demands deep, sophisticated knowledge of both evolving statutes and local regulatory practices. At DubaiAdvocates.ae, our exceptional team of legal consultants offers elite guidance tailored to protect your business interests from critical compliance risks.

Led by the strategic foresight of Adv. Ibrahim Khaleel, who brings over 15 years of seasoned legal experience within the UAE courts and regulatory chambers, our firm serves as an authoritative guide for both domestic enterprises and global multi-national corporations. We regularly provide comprehensive competition risk audits, construct bespoke corporate compliance frameworks, draft water-tight distribution models, and carefully manage complex filings for economic concentrations before the Ministry. From conducting clear market-share analyses to representing corporate interests in high-stakes disputes before the Dubai Courts, the DIFC, or the ADGM, our legal specialists ensure your operations remain secure, compliant, and perfectly aligned with the latest UAE laws.