UAE Law and Practice Contributed by: Alex Saleh, Asad Ahmad, Khaled Abuorabi and Habiba Wahdan, GLA & Company
sectors and exemptions (see 1.2 Legislation Relating to Particular Sectors ). 2.2 Failure to Notify Failure to notify a reportable economic concen - tration transaction may result in a fine of between 2% and 10% of the turnover generated in the UAE by the relevant undertaking during the last financial year being imposed or, if this data is not available, a fine of between AED500,000 and AED5 million being imposed. Nevertheless, the Ministry has as far as we are aware, never disclosed any penalties that have been imposed for violating an economic con - centration transaction. Penalties imposed by the Ministry are usually made public when disclosed via the Ministry’s official channels (ie, websites and social media pages) in addition to the local newspapers, which are likely to immediately pick up on this news. 2.3 Types of Transactions Competition Law The Competition Law has three defined terms which are key to understanding the regulatory framework of merger control in the UAE. The first definition is “relevant market”, which means, ”The market that is based on two ele - ments: • concerned products: the product or service or all products or services which are, in view of their prices, characteristics and uses, inter - changeable to meet a particular need of the consumer; and • specific geographical location: it means the physical or digital place where supply and demand converge for a product or service and where competition conditions are similar or homogeneous.”
The second is the definition of “economic con - centration”, which is ”any act resulting in a total or partial transfer (merger or acquisition) of a property, usufruct rights, rights, stocks, shares or obligations from an undertaking to anoth - er, empowering the undertaking or a group of undertakings to directly or indirectly control another undertaking or another group of under - takings”. In line with the Competition Threshold Rules, “economic concentration” exists if the relevant person(s) or undertaking(s) meet the thresholds mentioned in 2.1 Notification . The definition of ”economic concentration” is wide and includes several types of transactions, such as internal restructuring or reorganisation. The Competition Law does not consider control as a determin - ing factor for triggering the regulatory require - ment for notification. The determining factor will always be whether or not these transactions cre - ate “dominance” or ”economic concentration”. Transactions which do not involve the transfer of shares or assets (such as shareholders’ agree - ments and changes to articles of association) can still be caught under the auspices of the UAE Competition Legislation if they are consid - ered a “restrictive agreement” or if they lead to an abuse of a dominant position. This brings us to the third significant term which is the definition of “agreements”. These are defined as ”agreements, arrangements, coali - tions, or practices between two undertakings or more or any co-operation among establishments or resolutions issued by undertakings’ consorti - ums whether they are written or oral, explicit or implicit, or public or confidential”. The Competition Law considers “agreements” between undertakings which aim to create
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