UAE Introduces Market Definition Guidelines, Advancing Competition Law Framework

The United Arab Emirates took a significant step in formalizing its competition law framework in July 2026 when the Ministry of Economy & Tourism released detailed guidelines on how to define relevant markets—a foundational concept that shapes everything from merger reviews to enforcement decisions. The Guidelines on Relevant Market Definition arrive at a moment when the UAE's antitrust regime is still relatively young, following the adoption of a revised Federal Competition Law in 2023 and implementing regulations just three months earlier. For companies operating in the Emirates, the new guidance offers something they have lacked: a clear roadmap for understanding how regulators will assess whether their markets are competitive or concentrated.

Market definition matters because it determines the boundaries of competition. If you're a beverage company seeking to acquire a rival, the question of whether you compete in a "soft drinks" market or a broader "non-alcoholic beverages" market can determine whether the deal triggers mandatory review. The UAE ties its merger filing thresholds directly to revenue and market share within the relevant market, making definition not an academic exercise but a practical necessity. Companies must now decide whether to notify the Ministry before closing a deal, and the Guidelines provide the analytical framework they need to make that call. Beyond mergers, the framework also helps businesses assess their own competitive conduct—whether pricing, exclusivity arrangements, or other practices might violate competition law.

The Ministry's approach mirrors the European Commission's methodology, adopting a two-dimensional structure that examines product markets and geographic markets separately. On the product side, the Guidelines emphasize demand-side substitutability—essentially, whether customers would switch to an alternative product if prices rose significantly. The preferred analytical tool is the SSNIP test, which asks whether a hypothetical monopolist could profitably impose a Small but Significant and Non-Transitory Increase in Price without losing so many customers that the price hike becomes unprofitable. The Guidelines also incorporate a newer European tool called the SSNDQ test, which applies similar logic to quality rather than price. Beyond these formal tests, the framework considers practical factors: product characteristics, intended use, consumer preferences, switching costs, and the speed at which customers can actually shift their purchases.

Supply-side substitutability—the ability of producers to switch production to different products—receives less emphasis in the Guidelines. The Ministry will consider it case-by-case, primarily in straightforward situations where suppliers can retool their operations quickly and cheaply. Potential competition, meaning new entrants who might enter the market in the future, is excluded from the market definition stage but remains relevant when assessing whether a merger would substantially reduce competition. This distinction matters: a market might appear concentrated today, but if new competitors could enter easily, regulators might clear a merger that would otherwise raise concerns.

Geographically, the Guidelines adopt the European principle that markets should encompass areas with homogeneous competitive conditions—places where customers face similar competitive choices and suppliers operate under similar constraints. The UAE framework includes regional specificity absent from European guidance. Markets can be defined at the emirate level rather than nationally, recognizing that competitive conditions in Dubai may differ from those in Abu Dhabi. Free Zones, which operate under distinct regulatory and tax regimes, may constitute separate geographic markets if their competitive conditions differ sufficiently from surrounding areas. Most notably, the Guidelines recognize "digital places" as potentially forming relevant geographic markets, explicitly naming digital platforms and online marketplaces as examples. This reflects the reality that competition increasingly occurs in spaces without physical borders.

The Guidelines diverge from European practice in some respects. While the European Commission's recent guidance emphasizes non-price factors—quality, innovation, sustainability, data privacy—the UAE Guidelines give these factors less prominence. The Guidelines also do not address pipeline products, meaning drugs or technologies still in development, which European regulators sometimes include in market definition if R&D is sufficiently advanced. The approach differs more substantially from the UK Competition and Markets Authority, which takes a more pragmatic stance, analyzing competitive constraints through flexible "frames of reference" rather than formal market definition. The CMA views this as capturing competitive dynamics more fully than rigid market boundaries allow. The UAE has chosen the more structured European path.

For the Ministry, the Guidelines represent the latest piece of a rapidly expanding regulatory architecture. In 2025, the authority revised merger control thresholds. In April 2026, it adopted implementing regulations for the 2023 law. Now, with market definition guidance in place, companies have clearer rules for when deals require notification and how to prepare the economic reports that merger filings demand. The Guidelines cite European Commission decisions as reference points, and given that UAE merger decisions are not generally published, companies and their advisers will likely rely heavily on European and UK precedent to understand how the Ministry might apply these principles in practice. What remains to be seen is how the Ministry will handle the more discretionary elements—how strictly it will apply the SSNIP test, how it will treat potential competition in substantive merger analysis, and whether it will develop its own body of published decisions that diverges from European approaches. For now, the Guidelines have accomplished their primary goal: they have made the UAE's competition regime more transparent and predictable, giving companies a fighting chance to understand the rules before they encounter them.