Oman's new competition regulations come into force

The new Competition Protection and Monopoly Prevention Law (the Competition Law), which was published in December by Sultani Decree No. 67 of 2014, raises important compliance issues for companies doing business in Oman.

The law introduces a new merger control regime, as well as prohibiting restrictive agreements and abuse of market dominance. It also bans agreements or arrangements that are aimed at the monopolisation of markets.

Penalties

Distinct penalties have been outlined for non-compliance. For example, non-compliance with the bans on monopolisation, restrictive agreements and abuse of dominance can result in imprisonment for a term of between three months and three years, and a fine equal to the profit obtained from selling the products that are the subject of the violation. Alternatively, it can result in any one of those penalties in addition to a fine of 5-10% of total annual sales of the relevant products made by the infringing party in the previous fiscal year. Failure to comply with the obligations relating to merger notification can result in imprisonment of one month to three years, and a fine of OR10,000-100,000 ($25,900-259,000).

It is clear that the penalties under the law apply not only to businesses but also to individuals who manage the offending companies or legal entities, including the chairman, members of the board of directors, the chief executive officer, authorised managers or officers of the offending legal entity, where it can be shown that they were aware of the violation and that their failure to fulfil their duties contributed to the perpetration of the crime.

Enforcement & Application

The Public Authority for Consumer Protection is tasked with enforcing the law and breaches of the law are to be referred to the Public Prosecution. The law applies to all activities of production, trade, services and other economic activities, as well as the use of intellectual property rights that could have a damaging effect on competition. It applies to all sectors of the economy but not to public utilities wholly owned and managed by the state, or research and development activities.

The law prohibits a wide range of activities, including fixing prices, discounts, conditions of sale or purchase or provision of services, limiting output or supply to the market, flooding the market with large quantities of products leading to unrealistic prices, and market sharing on the basis of geography, customers or time, among others.

This could potentially capture a wide range of activities and agreements. Not only does it mean that companies must on no account engage in obviously infringing activities, such as cartel arrangements or bid-rigging, but it also means that commercial agreements will have to be carefully reviewed for compliance.

Market Dominance

Businesses with a position of dominance in the market must not engage in any practices that would undermine, curtail or prevent competition. Dominance is defined as the ability of a person, or group of persons together, to directly or indirectly control or influence the market, and includes the acquisition of more than 35% of the market volume.

The prohibited practices include predatory pricing, constraining supply to increase prices of a product, imposing restrictions on the sale or purchase process or on dealing with others which weakens their competitive provision compared to competitors, and refusing to deal without justification in order to restrict entry to the market or exclude others from the market, among others.