The United Arab Emirates Competition Law

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Table of Contents

Introduction
Overview
Weak and Ambiguous Legal Structure
Political Decisions
Political Influence
Transparency
Foreign Investments
Conclusion
Works Cited

Introduction

According to the Swiss Competition Commission, competition law is the main regulator of a businesss competitive behavior (Swiss Competition Commission). Competition law helps in ensuring that market structures and prices are not manipulated (Swiss Competition Commission). Having a strict competition law helps people to anticipate future conditions, and this goes a long way in helping one to make decisions that would be affected by the competition law with much more certainty. In some ways, it favors its citizens over foreigners and varies from one emirate to another. This paper discusses the problems experienced by the loose nature of the UAE competition law by looking into some of its aspects and critiquing it.

Overview

The competition law of the UAE came into effect in 2013. Four main rules in the UAE dictate how foreign companies should conduct business. These laws are the Commercial Agencies Law, the Industry Law, the Federal Companies Law, and the Government Laws (US Department of State). The composition and consequence of these laws must be understood. The competition law in the UAE is overseen by the UAE Cabinet and the Ministry of Economy. A minimum of 51% of the ownership of all the companies established in the UAE must belong to UAE nationals and those companies listed on the security market must have maximum foreign ownership of 49% as stipulated by the Federal Companies Law (Swiss Competition Commission).

Weak and Ambiguous Legal Structure

The UAE legal structure is a hybrid between common law, sharia law, and civil law. It is not clear which law is applicable in what circumstance (Swiss Competition Commission). In addition, numerous economic and non-economic establishments are exempt from law enforcement (Sengupta and Dube). Examples of establishments exempt from competition law are pharmaceutical companies, financial services, telecommunications, government, SMEs, and others (BTI). UAE does not consider precedents in its legal proceedings. This means that it is almost impossible to have a clear picture of how the ruling on a particular legal aspect might turn out (Swiss Competition Commission).

Political Decisions

It is right to say that the UAE government is not democratic. UAE is mainly sheikhdom. The competition law is overseen by the UAE cabinet, Competition Committee, and the Ministry of Economy. This decision-making structure is open to prejudice, and enforcement of the competition law becomes susceptible to unfairness and bias (US Department of State). It is hard for someone to know really what any of the three overseers is responsible for. In addition, the different emirates have different rules and practices. The competition law should only incorporate a single enforcer for clarity purposes. According to the 2014 Investment Climate Statement, unclear and loose policy concerning the oversight of the competition law has led to a lack of regulatory transparency (Swiss Competition Commission).

Political Influence

Most of the large businesses in the UAE are either run by the government or by wealthy families. These wealthy families are influential in political decision-making. It is, therefore, hard to see the merit of decisions concerning the business if the same laws are influenced by the same business owners. Inefficiencies are likely to arise in the marketplace as there exists no clear separation between the policymakers and these wealthy families (Sengupta and Dube). The competition law does not adequately define a separation between the public and the private sector due to the participation of ruling families in many UAE businesses.

Transparency

There is a lack of transparency in doing business in the UAE. In addition, the management must have a UAE nationality (BTI). The insistence of ownership and control by UAE nationals raises the issue of lack of transparency as it is hard for foreigners to establish the motives of the native management. There exists a lack of transparency in dealing with contracts as financial agreements and documents are not revealed. To make the matter worse, any joint venture not controlled by UAE nationals must have a UAE national as a partner, and listing should be under the UAE nationals name (Swiss Competition Commission).

Foreign Investments

Foreigners cannot invest in the UAE without going through an agent who is a UAE national. This agent can grant exclusive rights to a particular supplier. As a result, fair competition is curtailed. Foreign ownership of land in the UAE is allowed. However, there are no agreed-upon rules about land ownership in all the emirates. What exists is a deviation of the collection of rules among emirates (US Department of State). Some emirates allow foreigners to have leasehold or freehold in particular areas. The owners of these lands are not given automatic permissions and rights to live in the UAE. In addition, there exist no written laws or regulations that guide land title documentation and conveyance. As a result, those buying land are often not sure if they will get a freehold title with the same meaning as that in the US or Europe. Unclear or confusing rules about land ownership and investments are a deterrent in attracting investments (BTI).

Conclusion

The benefits of having a stringent competition law regime arose because of the ability of this law regime to avoid problems associated with the ambiguous UAE competition laws discussed above. UAE has some laws with double standards. However, countries such as the UAE are reluctant to have laws that are completely open to free trade. UAE fails to reap the benefits of globalization that include better consumer welfare, economic growth, and efficiency.

Works Cited

BTI 2014. United Arab Emirates Country Report. 2015. Web.

Sengupta, Rijit and Cornelius Dube. Competition Policy Enforcement Experiences From Developing Countries And Implications For Investment. Paris: Oecd Global Forum On International Investment, 2008. Print.

Swiss Competition Commission Israel Antitrust Authority, 2009. Special Project for the 8th Annual Conference Competition Law in Small Economies. 2015. Web.

Swiss Competition Commission. Competition Law In Small Economies. Zurich: International Competition Network, 2009. Print.

U.S Department Of State. 2014 Investment Climate Statement. Web.

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