Restrictive Agreements in the UAE: Price Fixing, Market Allocation, Exclusivity, and Vertical Restraints

Competition risk in the UAE does not begin only when a company becomes dominant. Agreements between independent businesses can themselves violate competition law where their object, purpose or effect is to distort, lessen, prevent or restrict competition.

The principal framework is Federal Decree-Law No. 36 of 2023 Regarding the Regulation of Competition. Article 5 contains the central prohibition on restrictive agreements, while Cabinet Resolution No. 59 of 2026, effective from 30 July 2026, provides the current procedural framework for exemptions, complaints, investigations and enforcement. The Ministry of Economy and Tourism has also issued current competition guidance and the first 2026 block exemptions for specific categories of agreements.

The legal risk is not limited to written cartel contracts. Competition concerns can arise from formal agreements, informal understandings, tender coordination, customer allocation, platform restrictions, distribution arrangements, exclusive-dealing clauses, pricing mechanisms and other conduct through which independent undertakings coordinate competitive behaviour.

The practical compliance question is therefore: does the agreement preserve each party's ability to compete independently, or does it coordinate price, customers, output, market access, distribution or another important competitive parameter?

Article 5 is the central restrictive-agreement prohibition

Article 5 prohibits agreements between undertakings where the subject, purpose or impact is to distort, lessen, prevent or restrict competition.

The statute identifies several examples, including agreements that lead to:

• direct or indirect fixing, increasing, decreasing or otherwise setting selling or purchasing prices in a way that harms competition;
• determination of conditions of sale, purchase or service performance;
• collusive tendering or bidding in tenders, auctions and other supply processes;
• freezing or limiting production, development, distribution, marketing or other economic activity;
• collusive refusal to buy from, sell to or supply particular undertakings;
• restrictions on the free flow of goods or services into or out of a market;
• market sharing or customer allocation based on geography, distribution centres, customer type, seasons or other criteria; and
• measures intended to block market entry, exclude undertakings from a market or obstruct participation in existing agreements or business alliances.

The list is broad enough to reach both classic horizontal cartels and other agreements capable of materially restricting competition.

Horizontal and vertical agreements should be analysed separately

A horizontal agreement is generally an agreement between actual or potential competitors operating at the same level of the supply chain. Examples include agreements between two manufacturers, competing distributors, rival platforms or competing service providers.

A vertical agreement operates between businesses at different levels of the supply chain, such as manufacturer and distributor, supplier and retailer, platform and merchant, franchisor and franchisee, or producer and wholesaler.

Horizontal restrictions generally create the greatest cartel risk because competitors are coordinating matters on which they should ordinarily compete. Vertical agreements can also restrict competition, but many vertical arrangements have legitimate commercial functions and therefore require a more contextual analysis of their purpose, scope and effect.

Price fixing is one of the clearest competition-law risks

Article 5 expressly prohibits agreements that directly or indirectly fix purchase or selling prices in a manner that negatively affects competition.

Price fixing is not limited to competitors agreeing on one identical final price. Potentially problematic coordination can include agreements concerning:

• minimum prices;
• maximum discounts;
• standard margins;
• surcharges;
• delivery fees;
• commissions;
• credit terms;
• rebate levels;
• timing of price increases; or
• common formulas used to determine prices.

An agreement that each competitor will increase prices by the same percentage can therefore create the same competition concern as an agreement on a specific price.

Informal understandings can create the same risk as written contracts

Competition law should not be approached as though liability arises only from a signed document.

Commercial coordination can be evidenced by meetings, messages, emails, internal notes, repeated communications or conduct showing that competitors reached an understanding about how they would behave.

Businesses should therefore train staff not to discuss future pricing, customer strategy, production volumes or bidding intentions with competitors merely because the discussion is described as informal or off the record.

Trade-association meetings require discipline

Industry and professional associations can perform legitimate functions, including education, standard setting, regulatory engagement and research. But they can also create a setting in which competitors exchange sensitive information or align commercial policy.

High-risk topics can include future price changes, current confidential discounts, customer-specific terms, future production, planned market entry or withdrawal, future bids, supplier boycotts and allocation of customers or territories.

Associations should use clear agendas, competition-law rules and minutes and should stop discussions that move into commercially sensitive coordination.

Information exchange can reduce independent competition

Not every exchange of business information is unlawful. Public statistics, genuinely aggregated historic information and independently produced industry research can have legitimate uses.

The risk increases where competitors exchange information that is current or forward-looking, company-specific, confidential, related to price, output, customers or bids, and capable of reducing uncertainty about how a competitor will behave.

For joint projects or due diligence between competitors, clean-team arrangements and aggregation can help reduce unnecessary exposure to sensitive information.

Bid rigging falls expressly within Article 5

Collusive tendering or bidding in auctions, tenders and other supply offers is expressly prohibited.

Bid-rigging structures can include agreeing who will submit the winning bid, submitting deliberately high cover bids, agreeing that certain competitors will not bid, rotating winning bidders, splitting customers among bidders or compensating a competitor for staying out of a procurement process.

Procurement teams should treat unusual bidding patterns, repeated common mistakes across bids and unexplained subcontracting between competitors as possible competition red flags.

Market allocation can be based on geography, customers or time

Article 5 expressly prohibits agreements that divide markets or customers on the basis of geographic regions, distribution centres, customer types, seasons, periods or other criteria that harm competition.

Examples can include competitors agreeing that one will serve Abu Dhabi while the other serves Dubai, one will sell to government customers while another focuses on private customers, or competitors will alternate customers or contracts.

Each competitor should normally decide independently where and to whom it will sell.

Output and supply restrictions can function like price fixing

Article 5 prohibits agreements that freeze or limit production, development, distribution, marketing or other economic activity.

Competitors do not need to agree directly on prices if they coordinate supply in a way that reduces competitive pressure and increases prices.

Agreements to delay product launches, limit capacity, reduce distribution, withhold stock or limit service availability should therefore receive competition review.

Collective boycotts can restrict market access

Article 5 addresses collusive refusal to buy from, sell to or supply particular undertakings and conduct designed to prevent or obstruct their activity.

A group of competitors agreeing not to deal with a new entrant, platform, supplier or customer can therefore create serious risk.

A business remains free to make its own independent trading decision, subject to other applicable competition rules. The concern arises when competitors coordinate those decisions.

Vertical restraints require a more contextual analysis

Vertical arrangements can improve distribution and investment. A manufacturer may appoint a specialist distributor, require quality standards, define a territory, protect launch investments or create brand-consistency rules.

Those arrangements should not automatically be treated as equivalent to a cartel.

But Article 5 is broad enough to capture vertical agreements whose object, purpose or effect is to restrict competition. Particular issues can arise around resale-price control, exclusive distribution, exclusive purchasing, territorial restrictions, customer restrictions, non-compete clauses, most-favoured-nation provisions, platform parity clauses, tying, bundling and restrictions on online sales or competing platforms.

Resale-price restrictions require careful drafting

Article 5 refers to agreements that set selling or purchasing prices and determine conditions of sale or service performance.

A supplier should therefore distinguish between a genuinely non-binding recommended resale price and a mechanism that effectively forces the distributor or retailer to maintain a specified price.

Potential enforcement mechanisms can include threatening to terminate a discounting dealer, withholding rebates from retailers that depart from the target price, monitoring and punishing price deviations, using software to impose a minimum price or coordinating retailer complaints against a discounting seller.

A label such as “recommended retail price” will not necessarily protect a system that functions as a fixed or minimum resale price in practice.

Maximum prices can require a different analysis

A supplier may use maximum resale prices to protect consumers or prevent excessive downstream mark-ups. But a stated maximum can become an effective fixed price if distributors have no realistic ability to price below it or commercial incentives force alignment.

The actual operation of the pricing mechanism matters as much as its contractual label.

Exclusive distribution can have legitimate commercial functions

Exclusive distribution may encourage a distributor to invest in promotion, training, inventory, after-sales service or market development.

Risk increases where exclusivity substantially forecloses competing suppliers or distributors, prevents market entry, or operates alongside other restraints that remove meaningful intra-brand or inter-brand competition.

The analysis should consider duration, geographic scope, market coverage, the parties' market positions, availability of alternative routes to market, investment being protected, termination rights and restrictions on online or passive sales.

Exclusive purchasing can foreclose competing suppliers

A buyer may agree to source all or most of its requirements from one supplier. That arrangement can be commercially rational where the supplier makes dedicated investments or guarantees capacity.

But it can create competition concerns where a significant share of customers are locked up for long periods and rival suppliers cannot reach enough demand to compete effectively.

Businesses should therefore avoid analysing exclusivity only from the perspective of the contracting parties. The cumulative effect on the wider market can matter.

Digital-platform exclusivity now has a specific 2026 block exemption

Ministerial Decision No. 32 of 2026 provides an important current example of how UAE competition law treats vertical exclusivity.

The Decision grants a conditional block exemption for certain exclusive-dealing agreements between digital platforms operating in food promotion and delivery services and restaurants.

Conditions include:

• the exclusivity must be entered into freely without coercion or retaliatory measures;
• the exclusivity period may not exceed twelve months under the Decision;
• the number of exclusively contracted restaurants may not exceed 10% of the total merchants listed on the platform;
• the arrangement must not prevent the restaurant from partnering with emerging platforms or qualifying SME delivery platforms;
• commission reductions connected to exclusivity must be supported, where requested, by verifiable cost reductions or tangible added value; and
• the agreement may not prevent the restaurant from joining competing platforms after the exclusivity period ends.

The Decision is important not because every exclusivity arrangement follows those numbers, but because it demonstrates how narrow and conditional a block exemption can be.

A block exemption is not a general safe harbour

Ministerial Decision No. 32 of 2026 applies to a defined market and defined category of agreements.

A manufacturer, franchise system, retailer, logistics provider or unrelated digital platform cannot simply copy the same 10% or twelve-month limits and assume its own agreement is exempt.

Outside a specific block exemption, the parties must analyse the arrangement under the Competition Law and, where appropriate, consider an individual exemption.

The Ministry can create other category exemptions

Article 11 permits specified categories of agreements or contracts to receive exemptions where the statutory criteria are met.

The Ministry's current competition-legislation page also lists Ministerial Decision No. 96 of 2026, providing a temporary exemption to certain agreements and categories of contracts intended to secure continuity of essential goods and services in exceptional circumstances.

This confirms that exemptions can be temporary, sector-specific and policy-driven.

Individual exemptions are available under Article 9

Article 9 permits agreements or practices to be exempted where the undertakings prove that they are necessary for promoting economic development, improving performance and competitiveness, developing production or distribution systems or providing consumer benefits.

However, the arrangement must not impose restrictions beyond what is necessary to achieve those objectives and must not completely eliminate competition in the relevant market or a significant part of it.

Efficiency is therefore not a blanket defence. The restriction must be proportionate to the claimed benefit.

The 2026 exemption process contains a standstill obligation

Cabinet Resolution No. 59 of 2026 regulates the exemption filing process.

The filing can be submitted in Arabic or English. Confidential treatment can be requested for identified material, provided adequate non-confidential summaries are also supplied.

Critically, the undertaking must provide a written undertaking not to engage in the practices or agreements covered by the exemption application until the reasoned exemption decision is issued.

Businesses should therefore obtain competition advice before implementing a potentially restrictive arrangement and then asking for exemption after the fact.

Exemption decisions are time-limited and reviewable

The Competition Law gives the Minister or authorised representative 90 days to issue a decision on a complete exemption filing, with a possible extension of another 45 days.

The 2026 Executive Regulation requires the decision to specify conditions, effective and expiry dates and geographical scope where necessary.

An exemption can be extended on application, generally through a reasoned request submitted before expiry. The Ministry can also revoke an exemption where circumstances change, conditions are not fulfilled or approval was based on inaccurate or misleading information.

Changes to an exempted agreement must be notified

Article 9 requires undertakings to notify the Ministry of proposed amendments to agreements or practices that previously received an exemption.

An exempt agreement should therefore have a competition-compliance owner who reviews renewals, changes in scope, territories, exclusivity obligations and other material amendments before implementation.

Joint purchasing can produce efficiencies but still create risk

Businesses may cooperate to purchase inputs and achieve lower costs, better logistics or stronger negotiation leverage.

Joint purchasing can be pro-competitive, particularly for smaller businesses. But it may become problematic if participants coordinate downstream prices, divide suppliers, exchange unnecessary sensitive information or create excessive buyer power that forecloses competing purchasers or suppliers.

The agreement should limit cooperation to what is necessary for the purchasing objective.

Joint distribution and logistics require similar discipline

Competitors may use shared warehouses, delivery infrastructure or distribution networks to reduce cost.

Such cooperation can be efficient, but the arrangement should avoid unnecessary coordination concerning final prices, customers, commercial strategy, sales volumes or future bidding outside the legitimate joint function.

Operational firewalls and clearly defined governance can help preserve independent commercial decision-making.

Franchise systems can contain several vertical restraints

Franchise agreements often regulate branding, quality, location, sourcing, online channels and territorial activity.

Those restrictions can be important to preserving the franchise model, but they should still be reviewed where they limit resale pricing, prevent access to alternative suppliers, impose long non-competes or restrict legitimate competing sales channels.

The existence of a franchise relationship is not itself an exemption from UAE competition law.

Most-favoured-nation and parity clauses require market context

A parity clause may require a supplier or merchant to offer one platform terms at least as favourable as those offered through another channel.

Such clauses can prevent opportunistic discrimination in some circumstances, but broad parity arrangements may also reduce the incentive of competing platforms or distributors to offer lower commissions or differentiated business models.

Market power, coverage, scope and available alternative channels are therefore relevant.

Territorial protection is different from horizontal market allocation

A supplier may appoint distributors for separate territories as part of a vertical distribution strategy.

That differs from two competing suppliers agreeing between themselves not to enter each other's territories.

The first is a vertical arrangement requiring contextual analysis. The second is classic horizontal market allocation and presents materially greater competition risk.

Sector-specific competition regimes must be checked

Article 4 excludes agreements, practices or conduct concerning goods or services where another law gives a sectoral regulatory authority responsibility for competition rules, exemptions and economic concentrations, unless that authority requests Ministry involvement and the Ministry agrees.

Specified government-owned undertakings may also fall within statutory exclusions.

Businesses in regulated sectors should therefore confirm jurisdiction before applying the general federal framework.

The law has effects-based territorial reach

Article 3 applies the Competition Law to UAE economic activity and to foreign economic activity that affects competition within the UAE.

Two foreign suppliers agreeing outside the UAE to allocate UAE customers or fix prices charged into the UAE can therefore raise UAE competition concerns even if the agreement was signed abroad.

Multinational distribution policies should be reviewed for their UAE effects rather than only for the place of execution.

Competition complaints can be filed with the Ministry

The Ministry of Economy and Tourism provides a competition-complaints process for businesses and other interested parties.

The complaint identifies the complainant, the party complained against, the legal provisions allegedly violated, the relevant facts, the practices challenged and supporting evidence.

Distributors, customers, suppliers and competitors can therefore initiate regulatory scrutiny of a restrictive agreement rather than relying only on private contractual remedies.

The authorities can investigate without a complaint

Article 26 of the 2026 Executive Regulation allows the Ministry, relevant local authority or sectoral regulator to open an investigation on its own initiative where evidence provides reasonable grounds and sufficient information suggesting conduct that may prejudice, restrict or impede free and fair competition.

The authorities can also monitor markets and request documents, information and data.

A private agreement can therefore attract regulatory attention even if every contracting party remains commercially satisfied with it.

Document creation is part of competition compliance

Internal records can become central evidence in an investigation.

Risky statements include suggestions that competitors should move prices together, stay away from each other's customers, submit cover bids, punish discounting retailers or use exclusivity specifically to block a new entrant.

The compliance objective is not merely to avoid problematic wording. Commercial teams should avoid adopting the underlying anti-competitive strategy itself.

Article 24 creates significant penalty exposure

Violations of Article 5 fall within Article 24 of the Competition Law.

The fine is at least AED 100,000 and can reach 10% of the annual total sales realised by the violating undertaking in the UAE during the last completed fiscal year.

If those annual UAE sales cannot be calculated, the fine ranges from AED 500,000 to AED 5 million.

The same penalty framework applies to violations of Articles 6, 7 and 8 and specified breaches of the exemption provisions.

Obstruction or misleading information creates separate liability

Article 27 provides fines from AED 50,000 to AED 500,000 for conduct including preventing authorised officials from performing their duties, withholding information relevant to an investigation, providing misleading information or destroying relevant data.

Once an investigation begins, document-preservation and regulatory-response procedures should therefore be implemented immediately.

Courts can impose closure and publicity consequences

Upon conviction, the Competition Law allows the court to order closure of the undertaking for a period between three and six months.

The court may also order publication of the operative part of the judgment in at least two local daily newspapers at the violator's expense.

The reputational effect of a restrictive-agreement case can therefore be significant in addition to the financial penalty.

Competition infringements can also create civil exposure

Regulatory penalties do not necessarily resolve every consequence of an infringement.

A customer, competitor or other affected party may seek compensation where the requirements for a civil claim are met.

A company assessing cartel or restrictive-agreement exposure should therefore consider regulatory, contractual and civil consequences together.

A practical restrictive-agreement matrix

Arrangement	Primary competition concern
Competitors agree on price or discounts	Horizontal price fixing.
Competitors divide territories or customer groups	Market and customer allocation.
Competitors coordinate tender bids	Bid rigging and collusive tendering.
Competitors agree to restrict supply	Output restriction and artificial market conditions.
Supplier fixes distributor resale prices	Vertical price restriction and possible Article 5 risk.
Distributor receives territorial exclusivity	Potential vertical restraint; assess scope, duration and foreclosure.
Buyer agrees to exclusive purchasing	Potential foreclosure of competing suppliers.
Platform requires merchant parity	Potential reduction of competition between platforms or channels.
Joint purchasing arrangement	Potential efficiency, but buyer-power and information-exchange risks.
Trade association shares future pricing	Potential coordination of competitors' commercial conduct.

Practical checklist for distribution and commercial agreements

1. Identify whether the parties compete. Horizontal and vertical arrangements carry different risk profiles.
2. Remove competitor price coordination. Prices and discount strategy should be independently determined.
3. Check territory and customer clauses. Do not convert distribution design into horizontal market allocation.
4. Review exclusivity. Assess duration, market coverage, investment rationale and alternative channels.
5. Review resale-price mechanisms. Recommended pricing should remain genuinely non-binding.
6. Limit sensitive information exchange. Share only what is necessary for the legitimate transaction.
7. Review tender interactions. Competitors should not coordinate bidding decisions except within a lawful and transparent joint-bid structure.
8. Assess online restrictions. Digital sales and platform access can be important competitive channels.
9. Review parity and MFN clauses. Consider their effect on alternative platforms and discounting.
10. Check sector-specific regulation. Another regulator may have competition jurisdiction.
11. Consider exemption routes before implementation. The 2026 procedure contains a standstill obligation.
12. Do not assume a block exemption applies by analogy. Read its exact market, duration and conditions.
13. Train commercial staff. Informal communications can create the same risk as formal agreements.
14. Maintain an investigation protocol. Preserve records and coordinate regulatory responses promptly.

Key takeaway

Restrictive agreements in the UAE are governed by a broad competition-law prohibition. Article 5 of Federal Decree-Law No. 36 of 2023 covers classic cartel conduct such as price fixing, bid rigging, market allocation and coordinated output restrictions, but also extends to agreements whose purpose or effect restricts market access, distribution or other competitive parameters.

Horizontal agreements between competitors carry the highest inherent cartel risk because they coordinate behaviour that should ordinarily remain independent. Vertical agreements require more contextual analysis, but exclusivity, resale-price restrictions, territorial rules, parity clauses and non-competes can still become unlawful where they materially restrict competition.

The 2026 framework also makes exemption strategy more concrete. Article 9 permits individual exemptions for agreements that generate genuine economic, efficiency or consumer benefits without imposing unnecessary restrictions or eliminating competition, while Ministerial Decision No. 32 of 2026 demonstrates how a block exemption can impose detailed limits on exclusivity in a specific digital market.

Enforcement exposure is substantial. Article 24 allows fines of up to 10% of annual UAE sales for restrictive-agreement violations, and the authorities can investigate on their own initiative. Businesses should therefore review distribution, platform, procurement, trade-association and competitor-collaboration arrangements before implementation rather than waiting for a complaint.

HZ Legal can assist manufacturers, distributors, retailers, digital platforms, franchise networks, procurement teams, trade associations and joint-venture partners with UAE restrictive-agreement reviews, distribution and exclusivity clauses, pricing policies, tender conduct, information-exchange protocols, vertical restraints, block and individual exemption applications, competition complaints, internal investigations and enforcement defence.

Official and authoritative sources

• UAE Legislation — Federal Decree-Law No. 36 of 2023 Regarding the Regulation of Competition.
• UAE Legislation — official downloadable text of Federal Decree-Law No. 36 of 2023.
• UAE Legislation — Cabinet Resolution No. 59 of 2026, Executive Regulation of the Competition Law.
• UAE Legislation — official downloadable text of Cabinet Resolution No. 59 of 2026.
• Ministry of Economy and Tourism — Regulation of Competition and anti-competitive practices.
• Ministry of Economy and Tourism — current competition legislation, Executive Regulation, block exemptions and guidance.
• Ministry of Economy and Tourism — Exemptions and current category exemptions.
• Ministry of Economy and Tourism — Competition Complaints.
• Ministry of Economy and Tourism — Ministerial Decision No. 32 of 2026 on exclusive dealing in food promotion and delivery services through digital platforms.

This article provides general legal and regulatory information only and does not constitute case-specific competition, commercial, procurement or litigation advice. Restrictive-agreement analysis depends on the parties' relationship, market structure, market power, duration, coverage, purpose, economic effects, efficiencies and any applicable sector or block exemption. Agreements involving competitors, pricing, tenders, market allocation, exclusivity or sensitive information should be reviewed before implementation.