Competition Law executive regulations clarify predatory pricing rules

The recently issued Executive Regulations to the Competition Law provided clarification on several material and procedural matters. Among these were clarifications introduced regarding regulation of predatory pricing under UAE law. Predatory pricing was introduced as a standalone prohibition with the new UAE Competition Law issued in 2023. The Executive Regulations now clarify that predatory pricing may be caught by the relevant provisions independent of dominance. Furthermore, the Executive Regulations provide greater guidance on how below-cost pricing will be assessed in practice, while preserving the broad scope of the prohibition. The Executive Regulations distinguish between two principal scenarios: prices falling below average variable cost (AVC) or marginal cost are deemed predatory unless the undertaking demonstrates that the pricing is objectively justified by legitimate economic reasons unrelated to eliminating, restricting or preventing competition; and when prices remain above AVC or marginal cost but fall below average total cost (ATC), such pricing may be regarded as predatory where there is clear evidence of an anticompetitive plan or intent aimed at excluding competitors, restricting their activities or preventing market entry. The Executive Regulations also recognize several legitimate commercial justifications that may rebut allegations of predatory pricing. These include introductory promotions for new products or services, seasonal promotions, clearance of obsolete or perishable inventory, legitimate price matching and genuine cost efficiencies.