Protecting consumers against abuse by traders
The first article on Oman’s Competition Protection and Monopoly Prevention Law, Royal Decree No 67/2014 (“Law”) published in this newspaper on July 22, 2017, touched upon the object and scope of Law and elaborated on some definitions and important concepts under the Law such as “monopoly”.
To recap, the application and enforcement of Law in the Sultanate of Oman is overseen by the Public Authority for Consumer Protection or PACP — the Authority entrusted with the enforcement of the Oman Consumer Protection Law (Royal Decree No 66/2014) (“CPL”).
The enactment of the Law in 2014 must be viewed in the backdrop of the enactment of the CPL in the same year — legislation designed to protect fundamental rights of consumers against abuse by traders. The enactment of the Law should also be viewed in the background of the drive to deregulate the Omani economy as can be seen in the amendments in 2014 to the Oman Commercial Agency Law that changed it from a “pro-agent” law to one that removed certain statutory protections favouring Omani agents.
As is the case with other laws in Oman, however, the scope and application of the Law would become clearer as cases involving potential violation of the Law are litigated in Omani Courts.
However, purely from a corporate compliance perspective, businesses must not wait until that happens and should understand the requirements of Law that are evident from a plain reading before they contemplate indulge in acts that could be viewed as contravening the Law.
In addition to specifically banning monopolistic practices, the Law prohibits agreements or contracts from being concluded either inside or outside Oman, or exercise of any procedures or practices, whether written, oral, implied or expressed, for the purpose of preventing competition, eliminating it or undermining it through: (i) pricing, discounts, sale or purchase terms and conditions etc; (ii) determination of production quantities or elimination of the flows of the same to the market or removal thereof entirely or partially through storing or refraining from dealing in them; (iii) prevention, hampering, or suspending any practice for any person to perform his economic or commercial activity within the market; (iv) dealing or refraining from dealing with specific people; (v) refraining from trading the product in the market whether in terms of sale or purchase with certain persons; and (vii) manipulations in auctions or tenders among certain people etc.
The Law also introduces the concept known as “Dominant Position” which is used in the context of the prohibition on any person in a “Dominant Person” (whether natural or juristic eg a company) from practicing negatively affect or prevent it.
The term “Dominant Position” is defined as: “The ability demonstrated by an individual or a group of people directly or indirectly co-engaging in the control over the concerned market, and hence, acquiring a rate exceeding (35 per cent) thirty five per cent of the volume of this particular market”.
Persons in a “Dominant Position” are prohibited from indulging in, amongst other activities, the following:
(i) Selling the product for a price lower than its actual cost to prevent certain competitors from entering the market, excluding them from the market or exposing them to losses due to which they are unable to perform their activities. (ii) imposing restrictions on supplying the product to create unreal shortage in an endeavour to increase prices; (iii) imposing specific requirements regulating the sale or purchase or dealing with another person in such manner that such person becomes in a weak competitive position; (iv) refraining from dealing with any other person without reasonable cause in order to prevent such person from entering into the activities that infringe, competition, eliminate market or in an attempt to force it out from the market; (v) pricing or directly or indirectly determining the conditions for the resale of products; (vi) purchasing, storing or spoiling certain commodities for increasing prices or reducing the same; (vii) reducing or increasing the available quantities of certain product in such manner that the same results in creating shortage or unreal abundance; (vii) discrimination without a reasonable cause among clients concluding similar contracts in terms of product prices, and sale or purchase terms and conditions; and (viii) keeping any manufacturer or supplier under obligation not to deal with any other competitor.
As of now, the application of the above provisions of the Law is open-ended and subject to broad interpretation. However, as the Law evolves and the PACP and Omani courts are seized of cases involving potential violations of the Law, the scope and application of the Law will become clearer. Until such time that this happens, Omani companies and groups must familiarise themselves with the evident requirements of the Law and conduct due diligence to ensure that they do not fall foul of specific prohibitions under the Law.
As of now, the application of various provisions of the Law is open-ended and subject to broad interpretation. However, as the Law evolves and the PACP and Omani courts are seized of cases involving potential violations of the Law, the scope and application of the Law will become clearer