Competition Law in Jordan: Merger Control and Anti-Competitive Practices
Competition Focus
Hamzah Abu-HassanPartner,Corporate Commercial
Selena KishekTrainee Lawyer,Banking & Finance
Competitive practices in Jordan have rendered essential legislation which seeks to encourage competition to stimulate economic growth in the market while combating unfair competition practices to protect consumers. The Amended Competition Law No. (12) of 2023 (the “Amended Competition Law”) has been issued and came into force on 16 April 2023 for this purpose. It governs competition in Jordan in conjunction with the Competition Law No. (33) of 2004 (the “Competition Law”). Further, the Amended Competition Law has been supplemented with the Council of Ministers Decision No. 43223 issued on 3 August 2023 (the “Council of Ministers Decision”).
The Amended Competition Law and Council of Ministers Decision have introduced the following main amendments:
Adding a definition of economic activity which encompasses industrial, commercial, tourism, trading, service and professional sectors;
Adding factors to consider when determining whether an entity has a dominant position in the local market;
Providing clarity regarding which entities fall outside the ambit of the anti-competitive practices provision;
Introducing a turnover threshold that triggers a filing requirement; and
Increasing the range of penalties for breach of provisions of the law.
The Competition Law defines an entity as any natural or legal person that carries out an economic activity. However, it does not define economic activity. The Amended Competition Law has introduced a definition of economic activity which encompasses industrial, commercial, tourism, trading, service, or professional activities, including information technology. The introduced definition provides clarity regarding which entities fall within the scope of the Competition Law.
An entity with a dominant position in the local market, or a significant part thereof, is prohibited from abusing its position to prevent, limit or undermine competition. The Competition Law lists practices in which entities having a dominant position are prohibited from engaging, as follows:
Fixing or setting prices or conditions of resale of products or services.
An activity or action which leads to setting barriers of entry of other enterprises to the market.
Discrimination between customers in similar contracts with regard to price of products or services or conditions of sale or purchase.
Forcing any of its customers to refrain from dealing with a competing entity.
Attempting to monopolize certain resources necessary for a competing entity to carry out its activities.
Refusing, without objective grounds, to deal with a particular customer under the usual commercial conditions.
Connecting the sale of a product or the provision of a service to the purchase of another or the purchase of a limited amount or a request for the provision of another service.
Excessive prices in violation of the principles specified in the instructions issued by the Minister of Industry, Trade, and Supply for this purpose.
The Amended Competition Law has added two factors to this list, as follows:
Controlling the quantities of goods or services in a way which leads to creating a false shortage or abundance.
Selling goods or providing services at a price lower than cost.
The Amended Competition Law has further introduced factors to be taken into consideration for the purposes of determining whether an entity has a dominant position, as follows:
Market share.
Financial capacity in the market.
Ability to access supply chains, markets, or production inputs.
Connections with affiliated or allied institutions.
The presence of obstacles that limit the entry of competing entities.
The ability of its suppliers or customers to deal with other entities.
Notwithstanding the above, an entity is considered to have a dominant position if its market share exceeds 40%.
The Amended Competition Law prohibits the carrying out of any anti-competitive alliances or agreements. This provision is not applicable to entities that are party to low-impact alliances and agreements and below a specific market share. However, the Amended Competition Law has not provided thresholds in this respect. The Council of Ministers Decision stepped in and set out specific thresholds, as follows:
A percentage not exceeding 3% of total transactions in the relevant market if they are competitive entities operating in the same market.
A percentage not exceeding 7% of total transactions in the relevant market if they are non-competitive entities operating in different markets.
The Amended Competition Law further introduced a triggering event under which the approval of the Competition Directorate (the “CD)” at the Ministry of Industry, Trade and Supply (the “Ministry”) must be obtained.
The Council of Ministers Decision provides guidance in respect of the triggering event. It states that a merger-control filing is required in the event that the merger is believed to fall under one of the following categories:
The combined market share of the undertakings concerned exceeds 40% of the total transactions in any relevant market (noting that the market share is calculated by reverting to the relevant entities’ financial statements of the previous financial year), or
The net annual turnover is as follows:
The net annual turnover in Jordan for any of the concerned entities in the relevant transaction exceeds JOD 2 million. This threshold is triggered if at least one of the parties exceeds it – it is not sufficient that all parties combined exceed it but none of the parties individually.
The consolidated net annual turnover in Jordan for any of the concerned entities in the relevant transaction exceeds JOD 7 million. This threshold refers to the combined turnover in Jordan of each of the parties.
The Amended Competition Law provides for notification within 30 calendar days from the date of the conclusion of the agreement leading to the operation of economic concentration, and there is no further clarification as to what constitutes the conclusion of the agreement.
Original PenaltiesIn the event of a breach of the provisions of the Competition Law, fines may be imposed ranging from 1% to 5% of the annual total sales of goods or service revenues. If such revenues cannot be identified, the fine will range from JOD 5,000 to JOD 50,000.
Amended PenaltiesThe Amended Competition Law provides for a twofold increase of the penalties. Fines may now be imposed ranging from 2% to 10% of the annual total sales of goods or service revenues. If such revenues cannot be identified, the fine will range from JOD 10,000 to JOD 100,000.
The Amended Competition Law has reformed the competition regime in Jordan by clarifying the meaning of economic activity and dominant entities, introducing new filing requirements, and imposing increased fines in the event of breach of provisions of the legislation. In conjunction with the Amended Competition Law, the Council of Ministers Decision indicates a willingness to actively implement the law.
For further information,please contact Hamzah Abu Hassan and Selena Kishek.
Published in April 2024
