Introduction
The UAE government in the year 2023 passed a federal law for regulating competition in the country (Federal Decree Law No. 26 of 2023). The law was aimed at providing a stimulating environment for businesses to enhance effectiveness, competitiveness and consumers’ interest and achieve a sustainable development in the country.
Further, the law was necessary for maintaining a competitive market governed by market mechanisms. In line with principles of economic freedom, the law prohibits agreements, conduct and acts that constitute abuse of dominant position, monitors all economic concentrations and avoids any act that would distort or prevent competition.
What constitutes Economic Concentration?
One of the objectives of competition law is to avoid economic concentration in the country. The federal law defines ‘economic concentration’ as an act resulting in complete or partial transfer (merger or acquisition) of the ownership rights of the property, rights, equity, shares or obligations of a business to another, allowing the business or group of businesses to directly or indirectly control another business or group of businesses.
Economic Concentration may happen, especially in cases of acquisitions or mergers of businesses, as these actions may result in the creation or strengthening of the dominant position of a business.
Article 12 of the federal law, along with the Cabinet decision No. 3 of 2025, gives a detailed breakdown of the acts of merger or acquisition that may constitute economic concentration.
Article 12 states that the undertakings which are about to indulge in any merger or acquisition that may result in economic concentration must submit an application to the Ministry of Economy at least 90 days prior to the happening of such merger or acquisition.
The obligation of notifying the Ministry only becomes mandatory when the operations of these undertakings meet any of the following thresholds:
1. Where the total annual sales value of the concerned establishments in the Relevant Market within the country exceeds three hundred million dirhams (AED 300,000,000) during the last Fiscal Year, or
2. Where the total market share of the concerned establishments exceeds forty per cent (40%) of the total transactions in the relevant market within the country during the last Fiscal Year.
Deciding Economic Concentration
Upon receiving the documents, the Ministry shall issue a resolution within 90 days (extendable to an additional 45 days) from the date of receiving the documents to issue a resolution which may include any of the following decisions:
1. Approve the economic concentration if it does not adversely affect competition, or it has economic benefits that outweigh any adverse impact on competition, or
2. Approve the economic concentration provided that the relevant undertakings pledge to implement the conditions and obligations pledged thereby or determined by the Minister for this purpose, or
3. Rejecting the economic concentration, or
4. Announcing that the conditions stipulated in Article 12 do not apply to the economic concentration of the Applicants.
Conclusion
The law also provides for businesses to give undertakings to the Ministry of the measures that they intend to take to eliminate the harmful impact on competition. Further, the law also ensures inclusion of the stakeholders in the decision-making process by allowing them to express their opinion about the economic concentration by providing any data or documents. The thresholds provided by the federal law and the cabinet decision are essential factors that can make or break a merger or acquisition.
For more information, you may contact:
Thomas Paoletti
Francesca Romana Valeri
