Anti-monopoly law: A snapshot (Part 1)

HASSAN SHAD –
hassan.shad@arab-law.om –

The Sultanate of Oman’s Competition Protection and Monopoly Prevention Law was issued in December 2014 by Royal Decree No 67/2014 (“AML”). The application and enforcement of AML in Oman is overseen by the Public Authority for Consumer Protection or PACP — the same Authority that has been entrusted with the application and enforcement of the Oman Consumer Protection Law (Royal Decree No 66/2014).
AML is not unique to Oman because anti-monopoly or anti-trust legislation (as it is known in some countries) has been in force in many countries around the world, including the US, Europe, Asia and the Gulf.
Anti-monopoly law or anti-trust legislation is principally aimed at creating a “level playing field” for market players. The objective of the law is to prevent exploitation or abuse by a business or a group of businesses of the legitimate business interests of other businesses that could restrict or hamper fair market competition.
The end-objective of the law is to ensure that consumers — who are the ultimate recipients of goods and services — do not suffer at the hands of “cartels” or “monopolies” which can manifest in various forms such as through illegal agreements, hoarding of goods and price fluctuations etc.
AML is to be read together with, and in the context of, amendments in 2014 to the Oman Commercial Agency Law, Royal Decree No 26/77 (“OCAL”). Both AML and OCAL restrict monopolistic and anti-competition practices by Omani agents and distributors which has been ensured by taking away certain statutory rights previously given to Omani agents under OCAL. (For further details, please refer to recent three articles by this author on OCAL published in this newspaper).
In the context of Oman, AML is still in the process of evolution and as to how AML would be applied by PACP to existing trade practices in Oman and interpreted by Courts remains to be seen. It is nevertheless essential from the perspective of good corporate governance and compliance that Omani businesses and groups understand the scope and application of AML and appreciate how AML could impact their potential plans regarding mergers and acquisition of businesses in Oman.
AML in its own words aims at regulating the freedom of practising any economic activity, stabilizing the principles of the market rules and freedom of pricing in such manner that the same shall not restrict integral competition, prevent the same, or to be negatively affected.
AML applies to all activities relevant to production, trade and services or any other economic or commercial activities practised in Oman, or any other economic or commercial activities to be practised outside the Oman which have consequences in Oman. AML also applies to any form of violation relating to intellectual property rights, trade marks, patents and copyrights if the same has negative or adverse impact on competition.
AML applies to all kinds of “persons” both natural and juristic (eg companies) — whether or not incorporated and irrespective of their structure.
AML covers all forms and types of “transactions”, “agreements”, “business activity” whether direct or indirect, which could lead to monopoly, economic concentration, dominance or restraint of trade in Oman.
AML contains definition of certain important concepts which enable one to appreciate the true scope and application of AML.
“Monopoly” as a concept has been defined as “the control exercised by an individual or group of individuals, directly or indirectly in terms of quantum and pricing of a product or service which in turn leads to curtailing and restraining the freedom of competition/damage competition”.
For a monopoly to exist, the first element required to be established is that of “control” which may be direct or indirect in nature. The second requirement is that “control” must be over price, or product, or service. Thirdly, “control” must lead to curtailing or restricting freedom of competition or damage competition. In the absence of term “control” being defined in AML, the interpretation of this term is open-ended and it would remain to be seen what is deemed to constitute “control” leading Omani Courts to determine that certain practices have led to the creation or existence of a monopoly.
It is to be noted AML specifically prohibits any agreement or contract either inside or outside the Sultanate of Oman, whether written or oral, for the purpose of monopolisation in terms of import, production, distribution and sale or purchase of any commodity or trade in the same or the taking of measures through any form of monopoly that may negatively affect the market.
The next in the series of articles will cover other important concepts under AML such as “domination” and “economic concentration” and elaborate on what are the elements required to be established for “economic concentration” to be deemed to have come into existence.