Competition Act

On 31 August 2020, the Competition Act was published in the gazette which sets out the provisions to develop and maintain a competitive commercial environment for enterprises, and sets out restrictions, and prohibits business practices and arrangements which may have a negative impact on competition. The key areas of the Act are as follows:

The Act applies to all commercial transactions in the Maldives

  1. The provisions of the Act will apply to all commercial transactions carried out by enterprises in the Maldives, including commercial agreements, and commercial transactions which are carried out overseas but impact the competitiveness of any market in the Maldives.
  2. The provisions of the Act, however, will not apply to any actions taken under the sovereign powers granted to the state, or by any local council, or actions carried out under the Special Economic Zone Act.

Agreements Preventing Competition

  1. The Act prohibits the formation of a contract between two or more parties to restrict, distort or prevent competition of goods and services in the Maldives. This condition, however, does not apply to contracts formed within a group of companies.
  2. The Act further provides that if any such contract benefits the public, the minister is authorized to grant an exemption to such contracts.

Abuse of Dominant Position

The Act prohibits an enterprise that has a ‘dominant position’ with respect to the supply of certain goods and services, to use that position to impose unfair purchase or selling prices, engage in unfair trading practices that leave other similar enterprises at a competitive disadvantage, and other practices which have a harmful impact on competitiveness in the domestic commercial environment.

Rules on Mergers

  1. The Act prohibits mergers which result in substantial reduction in competitiveness in any market as a result of such merger. The Act goes on to specify what constitutes a merger and what arrangements are exempted from these rules.
  2. The exemptions to the merger rules prescribed under the Act include mergers that are finalized between two government companies, and mergers to be carried out between enterprises that carry on with activities in a certain market or provide services which serve public economic interests, provided that such merger has been approved by the Minister in accordance with the Act. The Act also provides an exemption from the merger rules to mergers which result in substantial reduction in competitiveness but provide significant economic benefits.
  3. The merger rules specified in the Act will be effective from 1 September 2021 onwards.

Complaints to be Filed with the Minister

  1. The Ministry is required to establish a mechanism to file complaints by members of the public and enterprises with respect to any contraventions under the Act.
  2. If any complainant is unsatisfied with the decision regarding their complaint, the Act provides that such person may submit the matter to the Courts within 30 days from the decision of the Ministry.

Effective Date

The Act will be effective from 1 March 2021.