UAE Law and Practice Contributed by: Alex Saleh, Asad Ahmad, Khaled Abuorabi and Habiba Wahdan, GLA & Company
2.9 Market Share Jurisdictional Threshold
Department will strictly follow the wording of the Competition Law or apply the same interpreta - tion followed under the general principles of EU competition laws. This includes the method of reflecting changes in the business during a refer - ence period (such as other acquisitions, divest - ments or business closures). The safest approach is therefore to consult the Competition Department before concluding an “economic concentration” transaction where there are grounds to believe that the jurisdic - tional thresholds are met at the group level but not at the ”undertaking” level. 2.8 Foreign-to-Foreign Transactions Foreign-to-foreign transactions by way of sale, acquisition or merger (whether shares or assets) are captured under the auspices of the UAE Competition Legislation once the jurisdictional thresholds under the Competition Threshold Rules are met, regardless of the location or nationality of the parties and subject to the local effects test (ie, the parties carrying out their activity or transaction in a “relevant market” or engaging in activities or carrying out transac - tions that have harmful effects on competition in the UAE). 100% foreign ownership of UAE onshore com - panies is generally allowed, subject to restric - tions or prohibitions on foreign investment for companies engaging in activities which have a strategic impact. The Economic Departments of Dubai and Abu Dhabi have published lists of more than 1,000 commercial and industrial activities which do not have a strategic impact. Companies incor - porated in these emirates that are engaged in non-strategic activities are able to be 100% for - eign owned.
Under the Competition Law there will be a mar - ket share threshold which will be determined in the new Implementing Regulations. If the thresh - old is met, notification becomes compulsory in line with the Competition Law and the Competi - tion Regulations. 2.10 Joint Ventures Joint ventures are subject to the same restric - tions and prohibitions as any other activity or transaction. As long as the joint venture does not contain any condition making the arrange - ment a “restrictive agreement” or an ”economic concentration”, the joint venture will not trigger any of the regulatory requirements under the UAE Competition Legislation and will not have to request an exemption from the Competition Department. If the joint venture is labelled as a “restrictive agreement” or an ”economic concentration”, the filing of the notification becomes a regula - tory requirement. It is clear that filing the regulatory notification is subject to meeting the jurisdictional threshold under the Competition Threshold Rules first. This requirement has to be met even before checking whether the joint venture is defined as a “restrictive agreement” or an ”economic con - centration” takes place. 2.11 Power of Authorities to Investigate a Transaction According to the Competition Regulations, the Competition Department has full power and authority to investigate, on its own initiative or following complaints submitted by third parties, complaints of a possible violation of competition
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