Market Forces In Oman: The New Competition Law

Earlier this year the Competition Protection and Control of Monopoly Law ("Competition Law") was passed in the Sultanate of Oman under Royal Decree No. 67 of 2014.

The purpose of the Competition Law is clear: to open up markets in Oman to growing players and reduce the effect that larger market players have on prices and flow of products and services. Its aim is also clear: to reduce the exploitative forces on consumers occasionally imposed by holders of significant market power.

Key areas addressed by the Law

Readers of the Competition Law will draw similarities with equivalent legislation adopted by other members of the Gulf Co-operation Council and with Articles 81 and 82 of the EC Treaty Establishing the European Community. The Competition Law governs the following practices:

Monopolies: arrangements that seek to control the quantity and prices of products or services are banned. Dominant market practices: simply being dominant is not unlawful but, dominance combined with participating in practices that aim to eliminate or restrict other market players is. The threshold above which dominance is established is set at 35% of the relevant market. Joint venture / merger notification: acquisitions, mergers or arrangements that would lead to a person or group of persons becoming dominant require advance clearance from the Consumer Protection Authority ("CPA"). Effect of the Competition Law on the Omani Market

Monopolistic Arrangements

Experience from around the world highlights that not all monopolies have the effect of restricting or damaging competition and the legislation recognises this by outlawing only those arrangements which have the effect of harming competition.

The legislation has additional bite through its claim of extra-territorial effect so that if, for example, a contract is made in Japan, between a Japanese car producer and its Omani distributors, which has the effect of limiting the monthly supply of spare car parts into Oman and thereby keeping the price of those spare parts artificially high, the contract would likely be deemed unlawful by a court in Oman.

Anti-competitive Arrangements

The legislation bans arrangements that restrict competition in Oman regardless of the market share of the wrongdoer. The following are expressly prohibited:

Requiring resellers to sell at a particular price or offer a particular discount Limiting the supply and flow of products by "warehousing" Carving up the market into distinct territories or by reference to specific clients Acting in a way which prevents or obstructs other market players...