Paul Sheridan, Partner, Dentons: Interview

Interview: Paul Sheridan

How do you assess the legislative process in Oman, and what sort of changes would encourage more participation from foreign firms?

PAUL SHERIDAN: First, we must remember that the current legislative process has developed over just 44 years. Every country has issues with its legislative system and development is always on-going. Two areas where Oman can improve are clarity and certainty. It needs more clarity in the drafting of some laws and more certainty as to what a new law will contain and when it will appear. All businesses like to know what laws they will be subject to and how these will affect their operations.

Oman is well regulated compared to some other countries in the region. The rule of law has always been central to life and business in Oman and continues to be so today. This quality is welcomed by foreign investors, but they also like to know if and when the laws may change, and currently this is hard to predict.

It will take a while to refine the system to a point where all stakeholders are involved in the discussion and formation of laws, but I am confident that Oman is heading in this direction. Working to increase legal clarity and reduce uncertainty as much as possible will go a long way towards encouraging more foreign participation – and indeed, helping domestic businesses.

What will be the impact of the recent changes to the Commercial Agencies Law?

SHERIDAN: The most recent changes came into effect in July 2014 with the repeal of Article 10 and the amendment of Article 7. The agent's statutory right to compensation has been diluted in the event of contract termination of the agency by the foreign principal, and has been removed where the principal sells goods either directly to end-customers or through other intermediaries. The commercial agencies regime made sense decades ago when Oman was developing its economy as it encouraged agents to invest time and money into creating very successful businesses. As an economy becomes more sophisticated, however, monopolies become inefficient. I think there has been a realisation now that monopolies must be broken up to achieve greater efficiency for the benefit of everyone.

Article 14 – the foundation of Oman's competition law – has also been replaced. The Public Authority for Consumer Protection can now make proposals forcing monopolies to relinquish control of goods and services where they have a dominant position. The Council of Ministers will be obliged to limit the number and types of agencies that each agent can hold, creating a framework to break up dominant positions.

How will the new competition law affect the local economy, especially for smaller businesses?

SHERIDAN: The Protection of Competition and Anti-Monopoly Law, which was issued in November 2014, introduces significant changes. Terms such as " monopoly", "dominance" and "economic concentration" are now enshrined in law. This is potentially a very bold step forward in the world of competition law. In many ways, as some anticipated, the Public Authority for Consumer Protection has now developed into a competition authority, similar to the UK and US models. However, the success of any anti-monopoly or consumer protection regime depends on how it is managed, developed and enforced. Competition law is largely economics, with the regulator focused on areas of the market that suffer from a lack of competition. The development of these laws will therefore be highly dependent on how the regulator sees its role and in particular what steps it will take to increase competition.

Smaller companies should benefit from a levelling of the playing field, giving them more room to grow. For example, if a product had to be represented by different unrelated agents in, say, six separate regions in Oman, then competition would naturally arise, efficiency would be fostered and the consumer should benefit. New enterprises and jobs should also be created, yet existing agents would still be in prime position and be able to do even better in a more efficient market.