The UAE’s competition law framework has evolved significantly over the last decade. Federal Law No. 4 of 2012, which first established the country’s competition regime, was replaced by Federal Decree-Law No. 36 of 2023 on the Regulation of Competition to reflect the changing dynamics of the UAE’s economy and align its competition framework with modern market realities.

To operationalise the Decree-Law, the Cabinet issued Resolution No. 59 of 2026 on the Executive Regulations, replacing the 2014 implementing regulations under the repealed 2012 law.

Although the Resolution was issued on 20 April 2026 and published in the Official Gazette on 30 April 2026, it has not yet come into force. In accordance with Article 33, it will become effective from 30 July 2026. Until then, the 2014 Executive Regulations continue to govern the procedural implementation of the competition regime.

Once effective, the Resolution will provide the procedural framework necessary for implementing the Competition Law, particularly in relation to assessment of market dominance and anti-competitive practices involving undertakings, competitors, customers, suppliers, distributors and other market participants.

The Resolution seeks to:

1. Provide the procedural framework for implementing the Competition Law.
2. Promote fair and effective competition across UAE markets.
3. Prevent anti-competitive and monopolistic practices.
4. Protect consumer welfare by preserving choice and fair pricing.
5. Encourage innovation and efficient business practices.
6. Enhance transparency and consistency in competition law enforcement.

Determining Market Dominance

Traditionally, businesses often associated dominance with market share alone. Although the size of an undertaking’s market presence remains an important consideration, it is only one indicator of market power rather than a decisive factor. Under Cabinet Resolution No. 3 of 2025, an undertaking is presumed to hold a dominant position when its market share exceeds 40% of the relevant market. However, the resolution clarifies that this threshold serves only as an initial presumption and does not automatically establish dominance. An undertaking may still be dominant below 40% or may rebut the presumption above it, depending on the wider factors discussed below.

The underlying question is whether an undertaking can influence market conditions without being effectively constrained by competitors, customers or suppliers.

1. Market Power Is a Multi-Factor Assessment

The Resolution requires authorities to undertake a broader economic assessment. These include undertaking’s:

1. Financial strength
2. Technological capabilities
3. Business model
4. Geographical presence
5. Customer dependence
6. Relationships with suppliers

And the barriers that competitors face when attempting to enter or expand within the relevant market.

The Resolutions also recognise that structural characteristics of the market are equally important. Markets with significant legal, financial or technological barriers to entry may enable an established undertaking to retain considerable market power, even where its market share is relatively modest. Conversely, a business with a large market share may still face sufficient competitive constraints if competitors can readily enter the market or expand their operations.

• The Importance of Consumer Choice and Market Structure

Another key consideration is the availability of alternatives. Where consumers can easily switch to comparable products or services, an undertaking’s ability to influence prices or commercial conditions is naturally limited. However, where substitutes are scarce or switching costs are high, its market power is correspondingly strengthened.

The Resolution also considers the undertaking’s commercial relationships. Long-term exclusive arrangements with customers or suppliers, significant customer dependence, or pricing behaviour that consistently departs from normal market conditions may all indicate an enhanced ability to influence the market.

• Dominance Is Not the Same as Abuse

Importantly, the Resolution distinguishes between possessing market power and abusing it. Commercial success achieved through innovation, investment, superior technology or operational efficiency is not, by itself, objectionable. Competition law intervenes only where that position is used in a manner that restricts competition—for example, by limiting consumer choice, creating barriers to market entry, or imposing unfair prices.

This distinction reinforces a fundamental principle of competition law: the objective is not to penalise successful businesses, but to ensure that success is not used to undermine the competitive process itself.

Predatory Pricing

Predatory pricing essentially refers to a pricing strategy in which an undertaking deliberately sacrifices short-term profitability in order to eliminate competitors, discourage new entrants or strengthen its market position before subsequently recovering its losses through higher prices. Because vigorous price competition often benefits consumers, a distinction must be made between legitimate competitive pricing and pricing designed to undermine the competitive process itself.

The Resolution therefore provides Two Pricing Scenariosbased on recognised economic cost measures.

1. Prices that fall below average variable cost or marginal cost.

Average variable cost represents the costs that vary directly with production, such as raw materials or direct labour, while marginal cost refers to the additional cost of producing one more unit of a product or providing one additional unit of a service. Pricing below either of these benchmarks generally means that the undertaking is unable to recover even the immediate costs associated with supplying its products or services.

Because sustained pricing at this level is ordinarily commercially irrational, the Resolution treats such pricing as presumptively predatory. However, this presumption is not absolute. An undertaking may rebut it by demonstrating legitimate commercial reasons unrelated to eliminating competition. Examples expressly recognised by the Resolution include promotional campaigns for new products, seasonal discounts, clearance of obsolete or perishable inventory, genuine responses to competitors’ pricing, and efficiencies resulting in lower operating costs.

• Prices above average variable cost or marginal cost but below average total cost.

These are not automatically considered predatory.

Average total cost includes not only variable costs but also fixed costs such as rent, depreciation and administrative overheads. Businesses may occasionally price below total cost for entirely legitimate commercial reasons, particularly during periods of market expansion or temporary reductions in demand.

Accordingly, the Resolution requires additional evidence before such pricing can be regarded as anti-competitive. Authorities must identify indications of an anti-competitive strategy, such as:

1. Intention to eliminate a competitor
2. Prevent a new entrant from entering the market, or
3. Discipline existing competitors.

The assessment extends beyond cost benchmarks alone.

Authorities may also examine:

1. Whether the undertaking occupies a dominant position
2. The duration for which the pricing strategy has been maintained
3. Whether it is directed at particular customers or geographic markets
4. Whether the undertaking is likely to recover its losses by raising prices after competitors have exited the market.

Equally important is the likely effect on consumers, particularly whether the pricing strategy could ultimately reduce consumer choice or lead to higher prices once competition has been weakened.

Taken together, these factors demonstrate that the Resolution adopts an effects-based approach rather than treating below-cost pricing as automatically unlawful.

Exemptions: When Restrictive Agreements May Be Permitted

Competition law generally prohibits agreements and commercial practices that restrict competition. However, not every restriction produces harmful market outcomes. In certain circumstances, cooperation between businesses may improve production, encourage innovation, increase efficiencies or generate tangible benefits for consumers.

The exemption process requires applicants to demonstrate, through market studies, economic analysis and supporting financial information, that the proposed agreement generates efficiencies that outweigh any potential restriction of competition. Authorities will examine factors such as

1. Characteristics of the relevant market
2. Market position of the parties
3. Availability of competing products or services,
4. Likely impact on consumers
5. Barriers to entry
6. Effects on small and medium-sized enterprises.

Looking forward

As the UAE continues to position itself as a global investment and commercial hub, a robust competition framework will play an increasingly important role in ensuring fair and efficient markets. The Regulations provide greater certainty by clarifying how competition authorities will evaluate market behaviour while balancing consumer protection with economic growth and innovation. Going forward, businesses should view competition compliance not merely as a legal obligation but as an integral component of corporate governance and risk management. Early legal assessment of commercial strategies and market conduct will be essential in navigating the evolving regulatory landscape.

References

Federal Decree-Law No. (36) of 2023 Regarding the Regulation of Competition.

Cabinet Resolution No. (59) of 2026 Regarding the Executive Regulations of Federal Decree-Law No. (36) of 2023 Regarding the Regulation of Competition.

Cabinet Resolution No. (37) of 2014 Regarding the Executive Regulations of Federal Law No. (4) of 2012 Regarding the Regulation of Competition (repealed).

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