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Competition Law in Oman

Published on : 05 Jul 2021
Author(s):Several

Competition Law in Oman (Updated in 2020) 

1. What is the name of the main regulator/ regulators governing the competition law in this jurisdiction?

  1. The Competition Protection and Monopoly Prevention Centre (The Centre)
  2. The Board of the Centre (The Board)

2. In the context of a merger acquisition in what circumstances, are the seller and/or the purchaser required to notify the competition regulator?

Under Article 11 of Oman Sultani Decree No. 67/2014, the entity intending to take action resulting in economic concentration will submit a written request to the Centre. The Centre will consider the request and issue the relevant decision related to it within 90 days of receiving the request. However, on the expiry of the 90-day period without a decision being reached, it will be considered to have approved it. The Centre may cancel the request after approving it when it is proven the information submitted by the applicant is untrue or incorrect or marred with fraud or forgery. The approval may not be given to any action resulting in economic concentration leading to the acquisition of a rate exceeding 50% of the relevant market.

3. What steps will a competition regulator take if there are potential concerns around a company obtaining a dominant market position following a merger/purchase of a competitor?

Centre personnel who are judicial officers under the Law will peruse the cases of monopoly and economic concentration and investigate the forbidden practices. They will also have the powers and authority to scrutinise and audit the required information, particulars and records.

4. How would a dominant market position be derived?

The ability demonstrated by any individual or a group of people directly or indirectly engaging in control over the relevant market and therefore acquiring a rate exceeding 35% of the volume of this particular market is domination.

5. Is it possible to appeal a decision by the competition regulator- how does this work?

The entity which submitted an application regarding economic concentration may submit a complaint to the Chairman of the Centre within 60 days of the date of the rejection being issued. The complaint will be determined within 30 days of its submission date. The lapsing of the period without any reply will serve as an approval of the complaint.

6. How quickly is any decision on a competition risk as a result of a merger/company purchase normally taken?

The Centre will consider the requests for economic concentration and issue the relevant Decision within 90 days.

7. What remedies are generally taken when a dominant market position is established which would a merger or acquisition?

Centre personnel who are judicial officers under the Law will peruse the cases of monopoly and economic concentration and investigate the forbidden practices. They will also have the powers and authority to scrutinise and audit the required information, particulars and records.

8. What penalties apply for failure to follow competition law in a merger or acquisition?

  1. Anyone who enters into any agreement or contract for the purpose of monopolisation or to take any form of monopoly which may negatively affect the market or enters into an agreement or contract for the purpose of preventing, eliminating or undermining competition or who has a dominant position, practices any activities which may infringe, negatively affect the competition, eliminate or prevent competition will be jailed for between three months and three years and fined an amount which is equal to the gain in terms of profits from selling the products which are the cause of the violation They will also be fined between 5% and 10% of the total annual sales of the products which are the cause of the violation gained by the violator during the last financial year.
  2. The entity intending to take action resulting in economic concentration will submit a written request to the Centre and an entity which fails to submit the request will be jailed for between one month and three years and/or fined between 10,000 and 100,000 Rials. Anyone who has breached the Centre resolution rendered under Article 11 of Oman Sultani Decree No. 67/2014 will be penalised in the same way.
  3. Anyone who prevents any judicial execution officer from entering the establishment, annexes and head offices or conceals any information required, or gives information considered irrelevant or misleading, hiding or damaging any documents or deeds required in the investigation process will be jailed for between one month and three years and/or fined between 10.000 and 100.000 Rials Officers acquainted with any information, particulars and records because of their position, not keeping them confidential or allows any third parties to get acquainted with them will face the same penalties.
  4. If the violations are repeated, the penalties will be doubled and the business or enterprise will also be shut down or their commercial activity suspended providing the period does not exceed 30 days.
  5. The president may impose administrative fines provided the fine does not exceed 5,000 Rials and the fine will be doubled for a repeat offence. Anyone who commits a similar offence in the next five years will be considered a recurrence in the application of the provisions of the Law. If the violation continues, an administrative fine of between 500 a day up to 10,000 application of the provisions of the Law. If the violation continues, an administrative fine of between 500 a day up to 10,000 Rials may be imposed.for the duration of the violation.

9. Are there any rules governing the way a company seen as having a dominant market position must sell or market their products - which are the most important ones?

Anyone having a dominant position will not practice any activities which will infringe, negatively affect, eliminate or prevent competition, including but not limited to:

  1. Selling the product at a lower price than its actual price to prevent certain competitors from entering the market, excluding them or exposing them to losses with which they will not be able to perform their activities.
  2.  Imposing restrictions on supplying the product to create an artificial shortage in an endeavour to increase the prices.
  3. Imposing specific requirements regulating the sale or purchase or dealing with another person to weaken the competitive position concerning the other competitive persons.
  4. Refrain from dealing with any other person without reasonable cause to prevent that person from entering into the market or in an attempt to force them out of the market.
  5. Stipulating the supply or sale of a certain commodity or rendering specific services against the purchase of certain commodity or performance of the service from that person or another person.
  6. Pricing or direct or indirect determination of the conditions for the resale of the products.
  7. Enforce certain obligation to cease the manufacturing, production or distribution concerning a certain product for a limited period.
  8. Purchasing, storing or spoiling certain commodities to increase the prices or prevent the reduction of the same.
  9. Reducing or increasing the quantities available of a certain product in a way which creates a shortage or artificial abundance.
  10. Discriminating without a reasonable cause amongst the clients concluding similar contracts in terms of prices, sale or purchase terms and conditions.
  11. Inducing dealers not to permit a certain competitor to use it may be in need of it concerning facilities or services.
  12. Keeping a manufacturer or supplier under an obligation not to deal with any other competitor.
  13. Pending conclusion or execution of a contract or agreement on condition of accepting obligations, irrelevant to the subject matter of the agreement.

10. What are the penalties for failure to apply competition rules when selling or marketing products?

Those who violate the Law will have to:

  1. Legalise their status or rectify the violation within a fixed amount of time, which will be determined by the court, provided the period does not exceed three months.
  2. Dispose of some assets, shares or right equity or take other actions to procure the removal and rectification of the violation effects.
  3. Keeping the violator under an obligation for settling a fine on a daily basis until the violation is rectified, which will be between 100 and 10,000 Rials.

11. Are there any rules which prevent companies from colluding with competitors in the market when setting prices?

Article 9 of Oman Sultani Decree No. 67/2014 prohibits any agreement or contract entered into either inside or outside Oman or any procedures or practices, whether written or oral implied or expressed, for the purpose of preventing, eliminating or undermining competition, particularly with regard to the prices, discounts, sale or purchase terms and conditions or provisions of the services. The forbidden practices include agreements between suppliers or competitors. The prohibition on restrictive agreements in the Law is not limited to agreements concluded between enterprises where  one, a few or all have a dominant position. The prohibition also applies to any enterprise and to all types of agreements, whether horizontal orvertical. The only test is if the arrangements would result in the prevention, reduction or elimination of competition.

12. What are the penalties for colluding with competitors?

The violating individual will be jailed for between three months and three years. They will also fined an amount equal to the gain in terms of profits from selling the products which are the cause of the violation. A rate of between 5% and 10% of the total annual sales of the products which are the subject of the violation gained by the violator during the last financial year.

13. Are there any rules governing the way a company seen as having a dominant market position as related to one product is able to sell or market other products?

There are no specific rules as the rules laid down are for a company having a dominant market position in general.

14. Are there any specific industries, which have particular competition rules? Give examples of some of the main ones- and the legislation governing this regime.

The Law applies to all production and trade activities and services or any other economic or commercial activities practised in Oman or any other economic or commercial activities to be practised outside Oman, and will have consequences in Oman. The Law will apply to any violation relating to intellectual property rights, trademarks, patents and copyrights, provided it has a negative or adverse impact on competition.

However, the Law does not apply to activities of public utilities owned and operated by the State in full as well as research and development activities carried out by public or private entities.

15. Do the free zones have a different competition regime from mainland?

No.

16. Are there any industries in which only state or public owned enterprises are allowed to operate? Give the main examples.

Oman Sultani Decree No. 50/2019 enacted the new Foreign Capital Investment Law which came into force on 1 January 2020. The Commerce and Industry Minister issued a negative list of 37 business activities in which foreign investment is prohibited.

These include:

  1. Services of photocopying and typing of documents;
  2. Translation and interpretation activities;
  3. Transactions clearance;
  4. Tailoring of Arabic menswear, of non-Arab menswear, of Arabic and non-Arab women's clothes, of sportswear and of military uniforms;
  5. Manufacture of Omani kimmah and of women's Abaia;
  6. Electrical repairs of a motor vehicle and recharging of batteries;
  7. Repair and clean of vehicle radiators, repair of motor vehicle air conditioners and exhaust sounds for cars;
  8. Wheel balance, service stations of washing and lubrication of cars, change car oil, washing and polishing cars and tyre and tube repairs;
  9. Transporting and selling drinking water;
  10. Labour recruitment offices and employment placement offices;
  11. Driving training;
  12. Laundering of all kinds of clothing and textiles, clothes ironing and laundry steam;
  13. Hair trimming and cutting, hairdressing, shaving and beard trimming for men, hairdressing and other beauty treatment for women and hair trimming and cutting, hairdressing for children;
  14. Taxi operations;
  15. Marine fishing and freshwater fish fishing;
  16. Education for handicapped;
  17. Homes for the elderly, orphanages, rehabilitation centres and specialised rehabilitation centres.

17. Are there any industries where fixed/state regulated pricing must apply? Give the main examples.

The promotions and price discounting are strictly regulated by the Public Authority for Consumer Protection in Oman.

18. What restrictions govern the inclusion of non-compete clauses in employee's contracts?

Non-compete clauses are regulated under Article 661 of Oman Sultani Decree 29/2013 (the Civil Code). Under Article 661 of Oman Sultani Decree No. 29/2013, the former employee can only be restricted for a limited time. The time limit must be fair, reasonable and not arbitrary to the employee. The duration will depend on the industry and the employee's level of expertise.(Recent Supreme Court Judgment). The former employee, under Article 661 of Oman Sultani Decree No. 29/2013 may only be restricted from competing within a certain geographical scope.

The Royal Oman Police issued Oman Decision No. 157/2020 on 6 June 2020 amending Article 24 of the Executive Regulations of the Foreigners Residency Law (Oman Sultani Decree No. 63/1996), which comes into force in January 2021.

It means expatriates working in Oman can move jobs without having to obtain a No Objection Certificate (NOC) from their previous employer. Under the previous law, if a NOC was not given by the employer, the individual was required to spend two years outside of Oman. The requirement for the NOC has operated indirectly as an effective non-compete tool for employers in relation to their expatriate workforce, dispensing the need to include non-compete restrictions in the majority of employment contracts.

 

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