A Comparative Analysis of United Arab Emirates and Kingdom of Saudi Arabia Competition Laws: Key Differences and Future Outlook

1. What are the main objectives of the United Arab Emirates (UAE) and Kingdom of Saudi Arabia (KSA) competition laws, and how do they differ?

The UAE’s Federal Decree-Law No. 36/2023 (UAE Competition Law), which replaced the older 2012 competition law, takes a modern and international approach to competition regulation. The primary objective of the UAE law is to foster market efficiency, encourage innovation. The law specifically aims to enhance consumer protection and combat restrictive practices, such as price-fixing and the abuse of dominant positions.

On the other hand, Saudi Arabia’s Royal Decree No. M75/1440 (KSA Competition Law) reflects the Kingdom’s more conservative economic structure. While it also seeks to promote fair competition, its primary focus is on preventing monopolistic practices and controlling economic concentration. This is reflective of the country’s structured market environment, where ensuring that no single entity dominates or distorts market competition is paramount. The Saudi law is centered more on maintaining economic stability through strict regulations against monopolies, and less on stimulating innovation.

While innovation is a critical component of Saudi Arabia’s Vision 2030, the competition law remains more conservative in fostering competition, emphasizing stability and regulatory control over market liberalization.

2. How do the scope and application of competition laws differ between the UAE and KSA?

The UAE Competition Law has expanded the scope of the competition framework. This law now applies not only to businesses operating inside the UAE but also to foreign entities if their activities affect competition within the UAE. The UAE has also removed broad sectoral exemptions, which were previously applicable to industries like telecommunications and oil and gas, meaning more sectors are now subject to competition regulations. The new competition law also applies to digital platforms, making it a comprehensive and far-reaching regulation. This reflects the UAE’s ambition to modernize its legal environment and remain competitive on the global stage, ensuring that businesses operating in or affecting its market comply with strict competitive practices.

By comparison, Saudi Arabia’s competition law is more narrowly focused. While it does extend to foreign entities, this is only the case if their actions significantly affect local competition. The Saudi law retains certain exemptions and is primarily concerned with preventing market dominance in critical sectors. Its scope is more focused on controlling the power of large domestic companies, with less emphasis on digital economies or cross-border activities. This narrower scope reflects KSA’s broader economic goals of market stability and protecting existing industries from monopolistic pressures.

3. What are the key differences in the regulation of mergers and economic concentrations?

When it comes to economic concentrations (mergers and acquisitions) the UAE Competition Law takes a more flexible but thorough approach. The law now introduces an annual turnover threshold, in addition to the market share threshold, as criteria for determining the requirement for mandatory notifications to the Ministry of Economy. Companies must notify the Ministry at least 90 days in advance, allowing sufficient time to assess whether the merger may negatively affect market competition. The UAE Competition Law is designed to prevent anti-competitive mergers, but it also allows for conditional approvals if the economic benefits of the transaction outweigh any adverse effects. This structure offers more flexibility for businesses while ensuring robust oversight.

In contrast, KSA Competition Law focuses heavily on market share thresholds to regulate economic concentrations. If a merger or acquisition leads to one entity controlling more than 40% of a market, it triggers a mandatory notification to the General Authority for Competition (GAC). The review process is stringent, and the GAC has the authority to reject deals that could lead to monopolistic control or significantly hinder competition. The KSA law is more rigid in this regard, reflecting a greater concern for preventing any consolidation that could lead to market dominance.

4. How do enforcement mechanisms compare between the UAE and KSA competition laws?

The enforcement of competition law in the UAE is handled by the Ministry of Economy, with oversight provided by the Competition Committee. The new law significantly increases the penalties for violations, with fines reaching up to 10% of annual revenue for companies that breach the law. These penalties, along with the removal of exemptions for certain sectors, signal the UAE’s commitment to ensuring that companies play by the rules and that the market remains competitive and fair.Saudi Arabia, in contrast, enforces its competition laws through the GAC. The GAC plays a central role in reviewing economic concentrations and regulating market practices. Enforcement in Saudi Arabia is more centralized and rigid, with fewer opportunities for businesses to challenge decisions or seek exemptions. The GAC has broad authority to impose fines and other penalties, but the structure is more focused on preventing monopolistic practices rather than offering businesses flexibility in their operations.

5. How are anti-competitive agreements and practices treated differently in the UAE and KSA?

Both the UAE and Saudi Arabia address restrictive agreements; such as price-fixing and market allocation, however, their approaches differ in terms of flexibility. In the UAE, the new competition law allows for certain exemptions if an agreement can demonstrate market efficiency or consumer benefits. For example, agreements that contribute positively to market competition may be permitted after rigorous evaluation by the

Ministry of Economy. Additionally, the UAE’s law has introduced stricter controls on predatory pricing and economic dependency exploitation, broadening the law’s scope to include modern competitive concerns.

In Saudi Arabia, the approach is far more conservative. The KSA Competition Law generally prohibits all forms of restrictive agreements, with fewer exceptions than the UAE allows. Agreements that could lead to unfair market conditions, such as price fixing or market allocation, are strictly forbidden, and there is little room for businesses to seek exemptions based on claims of efficiency or consumer benefits. This reflects Saudi Arabia’s focus on tightly controlling market behaviors to prevent anti-competitive practices and protect the integrity of its market.

6. How do enforcement mechanisms compare between the UAE and KSA competition laws?

The enforcement of competition law in the UAE is handled by the Ministry of Economy, with oversight provided by the Competition Committee. The new law significantly increases the penalties for violations, with fines reaching up to 10% of annual revenue for companies that breach the law. These penalties, along with the removal of exemptions for certain sectors, signal the UAE’s commitment to ensuring that companies play by the rules and that the market remains competitive and fair.

Saudi Arabia, in contrast, enforces its competition laws through the GAC. The GAC plays a central role in reviewing economic concentrations and regulating market practices. Enforcement in Saudi Arabia is more centralized and rigid, with fewer opportunities for businesses to challenge decisions or seek exemptions. The GAC has broad authority to impose fines and other penalties, but the structure is more focused on preventing monopolistic practices rather than offering businesses flexibility in their operations

7. What are the penalties for violating competition laws in the UAE and KSA?

The UAE has significantly increased the penalties under its new competition law. Companies found violating the law may face fines of up to 10% of their annual revenue. If it is not possible to determine revenue, fixed fines between AED 500,000 and AED 5,000,000 can be imposed. The penalties are designed to deter anti-competitive behavior and ensure compliance with the law’s provisions.

In KSA, the penalties are similarly strict but are applied in a more traditional way. The fines are imposed based on the degree of market share and the severity of the restrictive practices involved. KSA Competition Law focuses heavily on punishing market dominance and restricting agreements that unfairly limit competition.

8. How might competition laws in the UAE and KSA evolve in the future?

The UAE Competition Law is likely to continue evolving, especially in response to the challenges posed by the digital economy and global market integration. The law has already adapted to regulate digital platforms and cross-border activities, but future amendments could expand the law’s scope further to ensure the UAE remains competitive in the global market.

For Saudi Arabia, the focus will likely remain on preventing monopolistic practices and ensuring market control. However, as the country continues to diversify its economy under Vision 2030, there may be a need for the competition law to adapt to new sectors, such as technology and digital services, ensuring that the growing private sector operates under fair and transparent competition rules.