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Report
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Commercial Law
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Table of Content
1. Commercial Law in the United Arab Emirates
2. Main Issue Identified
3. Objectives of the Project
4. Methodology
5. Different Aspects of Government Regulation of Business
6. Debates on regulation
7. Rationale for regulation
8. Typologies
9. Historical Review of Regulation
10. Rationale
11. Distinctive Characteristics of regulations
12. An assessment of the costs and benefits of the intervention
(regulation) for consumers, the industry, society as a whole
13. Evaluation and Recommendation
14. Conclusion
15. References
(Tamimi, 2016)
Too Contracted- The law limits the business dealings greatly, it can
lead to potential competition to be left out or so much unrequired
competition to be introduced.
Compromise with Free & Open Trade Ideologies: When some
restrictions are being implied for certain forms of business activity as
free trade policy and this may eventually lead to competitiveness being
competition does and therefore there was a need to challenge the market
power misuses and monopolistic practices of cartels, and protectionist
threats. In any country, in order to be eligible for being counted as
competition an initial screening is conducted by the policy consultants.
(Digital Commons, 2016)Competition law imparts a sense of security for
domestic establishments. In developing nations, the risk of foreign
competition stops several sectors from slackening trade blockades. Hence,
competition law is functional to make sure that firms do not perform
collusively and exploitation of market power does not take place.
(Business, Government and Globalization: An International Perspective,
2016)The report has been prepared in order to understand the
Commercial Law with few underlined objectives:
any country
How the goal of free, fair and open market has been made attainable
4. Methodology
obstructions to entry and exit, licenses and tariff laws, price and
remuneration controller in particular industries. Social regulations, in
contrast, are rules or laws focussed at social goals, such as protecting
2016)Regulation can take many forms and it cannot be assumed that all
of these will be equally effective. (Business, Government and
Globalization: An International Perspective, 2016)Indeed, it is possible that
a regulatory instrument will exacerbate or compound the problem it was
meant to address. Knowing when to regulate, whom to regulate and how
to regulate are surely some of the most difficult challenges confronting
any government.
7. Rationale for regulation
Till date, there have not been any noteworthy implementation actions
taken by the Ministry of Economy in UAE (the appropriate authority tasked
with governing the competition law) nor any prime UAE law court cases
administering the comestibles of the competition law. (Europa.eu, 2016)
One of the main motives for this is the law anticipates a number of
processes being thorough in supplementary executive regulations which,
until the recent times, had not been issued. (Europa.eu,
2016)Nevertheless, the Federal Cabinet of Ministers (Cabinet) of the UAE
has now dispensed executive protocols which took upshot on 27 October
2014. (Business, Government and Globalization: An International
Perspective, 2016) These regulations pact with processes relating to:
(i) Seeking absolutions from rules recitation to obstructive agreements
and abuse of prevailing situation.
(ii) Pre-merger authorizations where the cumulative suitable marketplace
share of the people involved exceeds a definite percentage.
(iii) Grievances being made by a concerned person to the Competition
Department of the UAE Ministry of Economy (Department).
example, one of the papers compulsory to be submitted as part of the premerger endorsement is the draft contract with respect to the merger. It
is indistinct whether this permits parties to arrive into a lawfully obligatory
sale arrangement that is provisional on endorsement being established.
(ftp.zew, 2016) Further, while the guidelines allow a party to necessitate
that information and documents that are submitted to the Department
remain trustworthy there is also a compulsion on that party to yield a nonconfidential summary of such information or documents that is adequate
to designate the content of trustworthy data. (Europa.eu, 2016) It is
indistinct as to what extent of detail such a summary will oblige.
In conclusion, additional primary breach that still remains with respect to
the UAE competition policy is that there are definite substances that are
mentioned to in the law as being the topic of distinct particular
determinations to be issued by the Department. (Europa.eu, 2016)One
such material is the pertinent percentage market portion edge that will
prompt the requirement for pre-merger endorsement. Till now these
resolutions have not been issued and till the time they are, and until
further guidance is received from the Department or the UAE Courts on
how definite ideas referred to in the law will be construed (for instance,
what organizes the relevant market for goods), the influence of the
competition law on economic movement within the UAE remains
indistinct. (Europa.eu, 2016)
8. Typologies
The scope and application of company law differ but basically they
include: the obligations of officeholders within the company to
shareholders; the duties of directors; financial reporting; members'
remedies; the laws governing takeovers and insolvency, and the forms of
protection afforded to shareholders and stakeholders. (Europa.eu, 2016)
10.
Rationale
The rationale for this policy was to prohibit anti- competitive practices in
the company like abuse of a dominant position and unfair trade policies.
Preferably, the motive of the competition is to apply new technologies to
the business by which companies can gain knowledge on how to modify a
technical idea to use in the marketplace. (Digital Commons, 2016)Though,
it was stipulated by other entrepreneurs that dealings involving
technology are too expensive, and it is only kept for big firms. In essence,
with better application of competition policy, UAE is expected to achieve
financial wealth to its people, hence, improved living standards. (Business,
Government and Globalization: An International Perspective, 2016)
With the increase in penalties for those who engaged in the anticompetitive activity is too risky for both companies and individuals. High
penalties and prison terms for individuals indicate that executives will
rethink about involving in anti-competitive conduct. With this, competition
authorities are also using a leniency policy which means that penalties
can be waived for the first member of a cartel to become an informer on
the other members. (ftp.zew, 2016)This increases the risk in engaging
with other firms to form a cartel. Even having a meeting with executives
from another firm in the same industry could be risky, as not only is there
a chance that emails, phones or the meeting itself are under surveillance,
but, in addition, the executives present from the other firm might already
be informers for the competition authority. (Europa.eu, 2016)
Over two centuries ago Adam Smith observed that markets are not
naturally competitive and are thus susceptible to anti-competitive
practices including collusion, predatory pricing, takeovers, resale price
maintenance and exclusive dealing arrangements. As a consequence,
many governments now vigorously pursue pro-competitive regulation with
new customer for a new entrant must be higher than the rate which could
be charged by the incumbent. This is most often the case with public
utilities, where, without regulation, monopoly prices can be charged as an
effective competitor is not likely to emerge. (Europa.eu, 2016)
A monopoly exists when there is only one seller to produce and sell a
particular kind of product in the market. As monopolists have no
competition, they are allowed to abuse their powers and price their
products at whatever price they wish. (Europa.eu, 2016) Monopolistic
competition occurs when a market consists of small businesses, fixed
costs and low barriers to entry and the economic model determines the
differentiated products. (Tamimi, 2016)
The fundamental connection between a policy and a developmental
process in the economy is the fact that competition policy and competitive
markets bring about the goal of enhanced economic efficiency in the
market, both in the static and dynamic sense.
(http://ec.europa.eu/competition/publications/reports/expost_evaluation_c
ompetition_policy_en.pdf, 2016)
Competition promotes efficiency ensuring that businesses produce at the
lowest attainable costs, providing incentives for businesses to undertake
research and development (R&D) and to quickly introduce new products
and production methods into the marketplace. (Digital Commons, 2016)
When competition is encouraged in an economy the primary goal is to
have numerous corporations under one market, selling the same types of
products. In order to compete with each other and survive in the market,
the corporations need to appeal to their consumers by lowering their
prices. Lower the prices, the greater positive consumer reaction. (Tamimi,
2016)
Competition policy prevents market concentration and associated
detrimental effects that include extensive inefficiencies, structural
integrity and non-adaptability to external shocks. (ftp.zew, 2016)
If a competition policy is not implemented at the right time, in the early
stage of economic development, it can cause costly industrial
restructuring at a later stage. (Tamimi, 2016)
13.
The fact is that which led to the selection of this topic of competition
policy in the UAE is because a lot of consumers are extremely exploited by
the companies and manufacturers. (Business, Government and
Globalization: An International Perspective, 2016) Hence, the government
must come up with the different kind of laws in favour of the consumers,
its people and at the same time it tries to save the companies as for
growing the economy you need more companies to come to UAE.
(Europa.eu, 2016) If competition increases in the UAE it will give more
doors of choices to consumers to choice of the product depending on the
price and quality. (Business, Government and Globalization: An
International Perspective, 2016)
At the same time, competition law must check what the need of the
consumers is as it might be the case that competition law is stopping the
companies to enter into the market which their people are needed. So, it
is necessary that competition law must analyse the need of its people and
adapt itself to the same. (ftp.zew, 2016)
If the statutory bodies start involving into the UAE demand and
requirement, free and fair competition can be maintained and practiced.
The same can also be updated with the time. (Digital Commons, 2016)
It is also seen that very few mergers are truly investigated in last few
years. If we see that after the implementation of Enterprise Act (2002), in
real even not a single cartel was investigated by OFT.
(http://ec.europa.eu/competition/publications/reports/expost_evaluation_c
ompetition_policy_en.pdf, 2016)
Heavy fines are there for such acts but it becomes difficult to prove them.
Hence, new powers have been given to regulators to capture such
activities. Their main focus has been to check on the firms if they found
any kind of establishment of collusion is taking place. (Digital Commons,
2016)
But such kind of collusion is very difficult to prove even impossible to
prove. Hence, to capture the same statistical techniques can be used to
build the correlations between the price movements in theory and
practice. (Business, Government and Globalization: An International
Perspective, 2016)
So, it has become crucial to find such kind of activities to save the interest
of the consumers and maintain healthy competition in the market. Only
then the free and fair market is maintained and builds. (Tamimi, 2016)
14.
Conclusion
Essentially, competition policies should be properly followed and
maintained, so that the UAE citizens will continuously meet their economic
demands and it continues to grow. (ftp.zew, 2016) Notably, all has not
been accomplished till now due to many factors; hence, the Government
of UAE should come up with more regulation measures that can protect
the consumer from being exploited by the seller. (Europa.eu, 2016) The
major role of competition policy is to maintain the competition in the
market so the fight for better quality, price and design are maintained and
consumers rights are not exploited by the private companies. (Business,
Government and Globalization: An International Perspective, 2016)
At the same time, if the United Arab Emirates want to encounter its
economic power it has to maintain new standards for transparency. So,
different companies can also rely on the government policy and see in
longer time working in the UAE. (Tamimi, 2016) As all the big companies
like to see stability in the market and government plays a key role on the
same. If competition will be more till a certain limit it will be a win-win
situation for everyone. Otherwise, big companies will exploit the smaller
companies and will try to monopolise the market. As, the same happen in
different industries and countries many times.
(http://ec.europa.eu/competition/publications/reports/expost_evaluation_c
ompetition_policy_en.pdf, 2016)
As in the year 2005, a OECD Policy Roundtable exchanged views on the
topic Evaluation of the Actions and Resources of Competition Authorities
and concluded that Considerable work remains to be done to refine the
methodologies used to evaluate the effectiveness of completed
competition policy interventions. (Digital Commons, 2016)
15.
References