What’s changing, and why is it important?
In July 2026, the Ministry of Economy & Tourism of the United Arab Emirates (the “Ministry” and “UAE”) published its Guidelines on Relevant Market Definition (the “Guidelines”), providing a detailed look into the Ministry’s framework for market definition assessment. The Ministry considers market definition to be a “fundamental pillar” to the competitive assessment across all competition enforcement contexts and a “crucial stage” in competition enforcement.
The issuance of the Guidelines marks a further important step in the implementation of the UAE’s competition law regime. It follows the introduction of revised merger control thresholds in 2025 and the adoption in April 2026 of implementing regulations for the 2023 Federal Competition Law (see our previous blog on these reforms).
The Guidelines are particularly important for the UAE’s merger control regime, where filing obligations are dependent on parties meeting revenue and/or market share thresholds in the “relevant market” in the UAE. The introduction of the Guidelines provides a crucial tool to merging parties and advisers for determining when transactions may require mandatory notification to the Ministry. More substantively, the Guidelines will provide an important source to help merging parties prepare the “economic report” on the competitive effects of a merger required by the UAE merger notification rules. Beyond merger control, the Guidelines will also provide an important tool for self-assessment of behavioural competition law compliance.
UAE Guidelines adopt a similar approach to the European Commission
The Guidelines, in line with the European Commission (“EC”), adopt a two-dimensional approach to market definition: (i) product market and (ii) geographic market. Reflecting this, the Guidelines are structured around both, detailing the Ministry’s methodologies to determine both dimensions.
Product Market
Similar to the EC, the Guidelines primarily rely on demand-side substitutability to determine the product market, considering it to be the “essential, if not decisive” method. To assess substitutability, the Guidelines identify a number of technical tests to aid market definition, with a preference for the Significant and Non-Transitory Increase in Price test (“SSNIP”). Other tests include price elasticity of demand to assess the degree of demand-side substitution and the Small but Significant and Non-Transitory Decrease in Quality test (“SSNDQ”) as a new tool adopted by the EC. More practically, the Guidelines also note the relevance of precedent decisions. Given that UAE merger decisions are not generally published, relevant decisions of key authorities—such as the EC and UK Competition and Markets Authority (“CMA”)—are likely to provide an important source of guidance.
The Guidelines largely reflect practices similar to those in other jurisdictions in identifying factors to consider when assessing substitutability. While price “is often one of the main and decisive factors in determining the substitutability of products from the demand side”, the Guidelines recognise the importance of taking a holistic approach. Other factors include product characteristics, intended use, price, consumer preferences, past substitution evidence, and regulatory and other barriers to switching. The Ministry should also consider the “effectiveness and immediacy” of substitution, which the Guidelines define as the consumer’s ability to directly and promptly shift demand to an actual or potential substitute.
The Guidelines place less focus on supply-side substitution. Supply-side substitutability is envisioned to be applied on a case-by-case basis when assessing “specific practices or applications”, largely reflecting a similar approach to the EC. Supply-side substitution is likely to be accepted in straightforward cases, for instance, where suppliers can switch production to another product without much additional costs or risks, and within a short timeframe. The Guidelines exclude potential competition from the market definition stage of the competitive assessment unless it is both effective and direct. However, potential competition remains relevant to the overall substantive assessment of the competitive effects of a merger. The authority can take into account the likelihood, timeframe and effectiveness of any potential entry in reaching a view on the competitive effects of a transaction, but how the authority will apply these factors in practice remains to be seen.
Geographic Market
Similar to the EC, the Guidelines identify the principle of homogeneous competitive conditions as determinative for assessing geographic market boundaries. They also incorporate some UAE-specific features, such as providing that markets can be defined at the emirate level and that Free Zones may constitute independent geographic markets if the competitive conditions are sufficiently different to those outside the zones.
Of note, the UAE’s competition regime recognises “digital places” as potentially forming a relevant geographic market. As examples of such geographic markets, the Guidelines state that “digital platforms and online marketplaces” could potentially constitute a relevant geographic market, potentially blurring the lines between product and geographic market definition. In practice, parties’ activities in the relevant market in the UAE will be determinative, given that both the merger filing thresholds and substantive provisions in the law are tied to activity and conduct within the UAE.
Key Differences to the EC and CMA
In general, the Guidelines reflect the principles and methodologies of the EC. Both competition regimes treat market definition as a structured, two-dimensional exercise centered on demand-side substitution and the SSNIP test, and both apply the “sufficiently homogeneous competitive conditions” standard for geographic markets. The Guidelines also expressly cite EC decisions as reference points and incorporate their new SSNDQ test.
However, there are a handful of areas of divergence. For example, while the EC’s Revised Market Definition Notice identifies the importance of non-price parameters, such as quality/service, innovation, sustainability, data privacy, etc., in defining the relevant market, non-price factors are given less prominence in the Guidelines. Similarly, the Guidelines do not address the treatment of pipeline products, which differs from the EU, where pipeline products may be included in market definition where R&D processes are sufficiently advanced to establish projected substitutability.
There is further divergence from the CMA’s approach to market definition, which in turn is somewhat more flexible than the EC. The CMA typically adopts a more pragmatic approach to assessing competitive effects through the lens of different “frames of reference”, thereby lowering the distinction between market definition and competitive assessment. In the CMA’s view, identifying the range of competitive constraints at play “captures the competitive dynamics more fully than formal market definition”, thus placing a reduced emphasis on market definition.
Conclusion
The Guidelines provide a welcome addition to the growing collection of legislation and guidance on the operation of the UAE’s competition regime. In conjunction with the recent implementing regulation, revised merger control thresholds and guidance on submitting competition complaints, the Ministry is moving quickly to further formalise the regime.
For companies, the Guidelines increase transparency and predictability, while also offering useful insight into the Ministry’s overall enforcement style.