Abu Dhabi

Sultan Bin Saeed Al Mansouri, Minister of Economy, said on Tuesday that rules which sought to end monopolistic practices in the sale of basic food products will be expanded to end other exclusive distribution agreements concerning other commodities.

Al Mansouri told the Federal National Council the Commercial Agencies Law could be expanded to break other major monopolies of a new list of goods once approved by the Cabinet.

The minister did not name the goods or a time frame as to when these commodities will be freed from the monopoly of agencies.

A change to the law would end the current situation in the UAE, whereby certain distributors or agencies control the distribution of certain commodities. The current system has been condemned by the World Trade Organisation and is seen as key to the opening up of the UAE market.

The UAE imports 85 per cent of its food items, and 65 per cent of these food imports come from 10 countries only, which is risky for the country’s future food security, in case of problems or drop in production levels in these source countries.

In a letter sent to the House in response to a question by Abdul Aziz Abdullah Al Za’abi, a member from Ras Al Khaimah, concerning the gradual abolition of monopolies in commercial agencies, Al Mansouri said the move would further strengthen the competitiveness of the UAE economy by curbing monopolistic practices and ensuring timely supply of goods and services for consumers without any unjustified price rise.

“The move, which will have far-reaching positive impact on bringing down living costs is aimed at curbing an unjustified rise in prices of some commodities, boost competition in the local markets, and combat all types of monopoly and exploitation.”

The minister said that the move is in line with the Cabinet resolutions to liberalise the prices of some items.

Al Za’abi argued when the government started partial cancellation of some commercial agencies, particularly for basic products, a tangible drop in prices had taken place.

FNC members said the liberalisation of prices of some items had led to the increase in the number of distributors, which in turn helped to drop the prices of these items due to competition.

They added UAE should follow the patterns of Oman and Bahrain which kept the agencies and allowed distributors to enter the market. This has created fair competition which is in favour of the customers and the domestic economy as well.

They said they hoped that the revamp of the Commercial Agency Law would help put an end to monopoly in the market and would bring down prices further.

The Economy Ministry renewed licences of 4,022 commercial agencies until the end of November, including 2,509 agencies in Abu Dhabi, 1,354 agencies in Dubai and 159 agencies in Sharjah, Al Mansouri said in his letter to the House.