Overview of Competition Law in Jordan
The Law prohibits unfair practices and monopolistic acts that harm lawful competition to maintain a competitive market environment and thus achieve economic growth.
Nov 6, 2021
Purpose and Scope
The Jordanian Competition Law is designed to protect consumer interests and companies by encouraging and protecting fair competition in the local market. The Law prohibits unfair practices and monopolistic acts that harm lawful competition to maintain a competitive market environment and thus achieve economic growth.
The Law applies to all business activities and transactions involving products and services in Jordan and to international economic activities that may have an impact in the Jordanian market. (Article 3)
Enforcement and Policy
The Competition Directorate of the Ministry of Industry and Trade (CD) is the administrative body responsible for assisting courts in investigating competition law violations, accepting economic concentration applications, and drafting the competition policy.
The CD's investigators have judiciary powers when carrying out their duties, e.g. searching premises, accessing books and records, issuing summons, and instigating criminal proceedings. (Article 13)
The Court of First Instance has jurisdiction to adjudicate violations of the competition law (Article 16). Cases can be instituted by either submitting a complaint to the public prosecutor who refers it to the Court of First instance; or by submitting a complaint to the CD, which investigates the complaint and refers it through the Minister; in the situation of a positive finding, to the General Prosecutor who in turn refers it to the Court. (Article 17)
The Law also establishes the Competition Committee, chaired by the Minister of Industry and Trade, which approves the competition policy and recommends amendments to the Law. ( Article 14)
Unfair Trade Practices
Article 5 of the Competition Law contains a non-exhaustive list of anti-competitive practices: price-fixing, limiting the free flow of goods and services to and from the market, denying access to the market, dividing the market geographically, freezing or restricting production, and bid-rigging.
The Competition Law prohibits all forms of behaviours and practices contrary to Article 5 of the Competition Law, including agreements, contracts, arrangements, or understandings between entities shall be prohibited, whether written or oral, explicit or tacit if their purpose or effect undermines competition.
Article 6 of the Competition Law prohibits any entity having a dominant position in the market, or a substantial part thereof, from exploiting such a position to undermine or limit competition. Article 6 sets out a non-exhaustive list of practices in which entities having a dominant position are prohibited from engaging:
- Selling goods or services at a price lower than the total cost to exclude other entities from the market or cause them serious losses or impede the entry of any other potential entities.
- Fixing the prices or conditions for the resale of goods or services or imposition thereof.
- Reducing or increasing the quantities of products to control prices.
- Discriminating in the treatment of entities with similar contracts concerning the prices of goods and service fees or the conditions of sale and purchase.
- Refusing to deal with another entity without an objective reason to restrict its entry into the market
- Requiring an entity to refrain from dealing with another entity.
- Making the sale of goods or the provision of services conditional upon bearing of obligations or acceptance of goods or services, which by their nature or by commercial use are not related to the goods or services subject to the original contract or transaction.
Article 8 of the Law prohibits any practices “detrimental to the fairness of commercial transactions”, such as setting a minimum resale price for a product or service, discriminating between entities, and resale products at a price below its actual purchase price.
Exemptions
Under article 7 of the Competition Law, the Minister of Industry and Trade, upon the recommendation of the CD, may exempt an entity from the application of Articles 5 (anti-competitive practices) and 6 (abuse of dominant position) of the Competition Law, if such exemption aims to achieve public interest in improving market performance, consumer interests, distribution systems, or the performance of entities.
Also, any measure imposed under existing laws, or any temporary measures imposed by the council of ministers in exceptional circumstances, emergencies, or natural disasters, are not considered anti-competitive in the sense intended in Articles 5 and 6 of this Law. Provided that such measures be reviewed after six months from their introduction date.
Economic Concentration
An entity or a group of entities is deemed to have a dominant position if it has a market share of 40% or more of the relevant market. (Article 9).
The Competition Law uses economic concentration to deal with merger control. Economic concentration is defined as "any activity resulting in the full or partial transfer of ownership or interest in property or rights or shares or obligations of an Enterprise to another, and which may enable an enterprise or a group of Enterprises to control, directly or indirectly, another Enterprise or group of Enterprises is considered an economic concentration operation any action that results in a total or partial transfer of ownership of assets, rights, equity, stocks, shares, or liabilities of a firm to another by way of merger, acquisition, takeover, or the merging of two or more management, or any other form that leads to the control of a firm, including influencing its decisions, the organization of its administrative structure, or its voting system".
This definition addresses asset and share purchases, joint ventures, mergers, and takeovers.
The Law provides that entities seeking to participate in an economic concentration transaction in which collective share exceeds 40% of the total transactions in the market must apply to the CD for approval within 30 days from concluding the concentration agreement. (Article 10-A ).
The CD publishes the information on the economic concentration application in two daily newspapers inviting any interested parties to provide their comments within 15 days from the publication date. (Article 10-d).
Upon the recommendation of the CD, the Minister of Industry and Trade may issue a reasoned decision to accept or not accept the application within 100 days from receipt of the complete documented application. (Article 11).
The Minister also has the authority to take all necessary measures to counter any economic concentration operations which were not reported or have violated the Law. (Article 11-E).
Minister's decisions issued under the Law may be appealed to the Higher Administrative Court. (Article 11-F)
Penalties
The Competition Law provides for the following penalties: the violation of any of the provisions of Articles 5 (anti-competitive practices), 6 (abuse of dominant position); a fine of not less than (1% ) nor exceeding (5%) of the total annual value of sales or revenues of services of the violator, or a penalty that is not less than five thousand Dinars (5000) nor exceeding fifty thousand Dinars (50000), in case that the value of sales or revenues has not been defined.
The violation of any of Articles 9,10, and 11 (Economic Concentration ) is punishable by a penalty that is not less than ten thousand Dinars (10000) or exceeding fifty thousand Dinars (50000).
The violation of Article 8 (practices detrimental to the fairness of commercial transactions) is punishable by a fine of not less than two hundred Dinars (200) nor exceeding twenty thousand Dinars (20000).
For disclosing any confidential information received from any source, except if that was according to a court order, is subject to a fine of not less than one thousand (1000) Dinars nor exceeding ten thousand (10000) Dinars.
Baha'a Armouti
Copyright © 2021 | Al Armouti Lawyers & Consultants. All Rights Reserved.Disclaimer: The information provided here is of a general nature and may not apply to any particular matter. It does not constitute legal advice nor presumed indefinitely up to date.
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