August 17th, 2023 Legal Updates

Common Pitfalls in Merger Control Filings

When companies enter into an economic concentration (e.g., mergers, acquisitions, joint ventures) pursuant to Kuwait Law No. 72 of 2020 (the “Competition Law”), and meet one of the relevant financial thresholds under Resolution 26 of 2021 (the “Financial Thresholds”), a compulsory merger control filing is triggered. The parties would need to navigate the intricate process of merger control filing, which entails obtaining approval from The Kuwait Competition Protection Agency (“CPA”). This process is not without its challenges, and without the proper legal guidance, parties can easily fall prey to common mistakes that can delay or even jeopardize the success of their transaction.

Understanding and avoiding these pitfalls is crucial. In this article, we will explore some of the most common mistakes made by parties in merger control filings, shedding light on key considerations for companies seeking a smooth and efficient approval process.

Miscalculating the CPA filing fee

When submitting a merger control application, companies are typically required to pay a filing fee. Failing to accurately calculate this fee can lead to delays in the approval process or even a rejection of the application. It is crucial for companies to use the proper entities and criteria when calculating the filing fee and ensure that the calculated amount is correct.

According to the Competition Law, applications must be accompanied by a receipt for payment of a fee of one-tenth (0.1%) of the paid-up capital, or of the combined assets of the relevant parties in the State of Kuwait, whichever is less, provided that it is not more than KWD 100,000.

When considering the option of resorting to paying one-tenth (0.1%) of combined assets as the method of calculating the filing fee, the parties to the economic concentration must obtain an official report from an asset evaluator (e.g. an auditing firm) which is approved by the Kuwait Capital Markets Authority. Assets reports from other than approved auditing firms will most likely be rejected by the CPA.

We have been engaged by multiple clients to refile CPA applications, which were originally filed incorrectly either by the parties themselves, or by an inexperienced legal counsel. We have found that the filing fee can easily be miscalculated and lead to a rejection of the application and a restart of the 90-day statutory period for the CPA to review the application. We were in fact involved recently in a refiling that was initially submitted by another law firm with a filing fee of zero to the CPA. Of course, a filing fee of zero (e.g. a newly established SPV with zero paid-up capital used to acquire another newly established SPV with zero paid-up capital) would not be accepted and would be seen as the parties attempting to circumvent payment of the fee. Consequently, the CPA rightfully disregarded the erroneous submission. We then correctly prepared the economic concentration application along with the proper filing fee and submitted the same. Unfortunately, this situation led to a significant delay in obtaining clearance from the Kuwait CPA which the parties had to account for under the closing mechanics of the transaction documents. Further, due to the financing of said transaction, the acquirer was faced with a potential loss of billions of US dollars in the event clearance was not provided in time.

Completion before CPA clearance

Parties to a concentration are prohibited from implementing the concentration before obtaining approval from the CPA. By seeking approval from the CPA, the parties involved provide an opportunity for the authority to thoroughly assess the potential impact of the concentration on market dynamics, competition levels, and consumer welfare. Only after receiving the green light from the CPA can the parties proceed with implementing the concentration.

The Competition Law explicitly outline the specific penalties of up to 10% of the parties global revenue from the previous year, for parties who fail to file an economic concentration application and obtain clearance. Further to the penalty, it is within the CPA’s authority to order the unwinding of a transaction for failing to comply with the procedures stipulated in the Competition Law.

On a similar note, the CPA disciplinary board recently imposed a penalty on a company equivalent to 5% of its total revenues for engaging in an economic concentration without submitting an application to the CPA.

Failing to submit an application to obtain an exemption 

The Competition Law exempts certain activities from being deemed economic concentrations. These activities are as follows:

  1. banks, insurance companies and financial institutions whose activities include trading in securities are exempt, provided they do not exercise the substantive voting rights conferred by such securities – in order to be exempt, the security must generally be disposed of within one year from the date of acquisition;
  2. acquisitions resulting from insolvencies, defaults, debt restructuring, compositions with creditors or similar transactions are exempt;
  3. restructurings within the same group of companies are exempt.

It is crucial to highlight that if an exemption is deemed applicable, the party or parties involved must adhere to the regulatory requirements set forth by the CPA. In such cases, it is imperative to note that proceeding with the implementation of a concentration is prohibited without first submitting an exemption application to the CPA. This requirement ensures that even if an exemption is applicable due to specific circumstances, the CPA retains oversight and can thoroughly assess the implications of the concentration on competition and market dynamics. Therefore, parties contemplating a concentration must prioritize compliance with this crucial step to avoid potential legal repercussions and to ensure a transparent and competitive business environment. GLA is proud to have obtained the first exemption from the CPA earlier this year, by utilizing the ‘restructuring within the same group of companies’ option.


In conclusion, while merger control is a relatively new area of regulation, it has quickly evolved into a comprehensive framework that aims to safeguard competition and protect market dynamics. As this article has highlighted, there are common mistakes that parties often make in the process of a merger control filing leading to substantial consequences. However, it is encouraging to see that the CPA, is actively addressing these issues and implementing measures to enhance compliance and streamline the process. As merger control continues to develop, it is crucial for businesses to stay informed and ensure strict adherence to the requirements.

Authors:  Asad Ahmad, Senior Associate, and Salma Farouq, Associate.

For further information, please contact Alex Saleh ( and Asad Ahmad (

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