The General Authority for Competition (“GAC”) in Saudi Arabia (“KSA”) has been making significant strides in promoting fair competition and economic growth in the country.  In its recently released  annual report (“GAC Report”), GAC underscored a series of noteworthy developments which exerted a profound influence on the competitive landscape in 2022 and looking forward to the trends in 2023.

This article is the second of a two-article series the GLA Anti-trust & Competition Department released, offering an in-depth examination of the vital insights and critical information outlined in the GAC Report, and providing a comprehensive perspective on the noteworthy advancements within the sphere of economic concentration filings in KSA throughout 2022.

Reassessing Fee Caps and Financial Thresholds:

In a bid to alleviate the financial burden on companies and align with international practices, GAC conducted a comprehensive review which revealed the need for a potential reduction of the maximum filing fee by nearly 63%, suggesting a revised filing fee cap of 250,000 Saudi Riyals, down from the previous 400,000 Saudi Riyals.  Notably, this proposal was not confined to discussions; it was effectively implemented when GAC announced on 7 June, 2023, that the filing fee would be capped at a maximum of 250,000 Saudi Riyals.

GAC conducts a regular review of the minimum financial threshold required for reporting an economic concentration. Said review takes into consideration the developments in the national economy and the competition-related risks stemming from unreported economic concentrations. Consequently, and according to the GAC Report, GAC was deliberated an increase in the minimum threshold for reporting economic concentrations and proposed a new figure of 200,000,000 Saudi Riyals, as opposed to 100,000,000 Saudi Riyals. Similar to the change in the filing fee cap, this proposal was not just a matter of discussion; it was implemented and adopted in accordance with GAC’s approved decision dated 23/08/144H, which corresponds to 15/03/2023G. This decision represents a proactive step by the GAC to incentives and promote transactions while ensuring a competitive business environment in line with international standards.

Enhancing Efficiency and Reducing the Timeframes for Reviewing Requests:

In 2022, GAC received 316 applications for economic concentration. It issued 176 no-objection decisions, achieving the highest rate of decisions issued by GAC in one year. It processed 128 applications as non-reportable applications and rejected 1 application.

GAC has enhanced its operational efficiency, with a focus on reducing processing times for requests. The average processing time for requests during 2022 was less than 30 days. With respect to the current processing time, based on our experience, it has been around 60 days to process a full economic concentration application from the time of submission.

Economic Concentration Filings:

A. Joint Ventures:

GAC received a total of twenty (20) applications that triggered economic concentration reviews and were approved. Out of these twenty (20) requests, nine (9) were specifically within the manufacturing industry sector, signaling a notable emphasis on ventures within this particular industry. This further indicates a significant interest and strategic focus on fostering partnerships and economic concentrations within this sector.

B. Mergers & Acquisitions (“M&A”):

GAC received a total of One hundred fifty-six (156) applications that were approved. These applications were spread across various sectors, with the highest number of M&A applications coming from the Manufacturing sector with a total of Thirty-four (34) applications, followed by the Information and Communications sector Twenty-four (24) applications.

These applications reflect the evolving economic landscape in KSA. Notably, the increase in M&A applications, particularly in manufacturing sector and then information and communications sector, aligns with the Kingdom’s future economic direction and growth potential.

C. Foreign Transactions:

The GAC Report reveals that 62% of the economic concentration applications received by GAC involved foreign parties. The top three countries were the United Kingdom, the United Arab Emirates, and the United States. This indicates the growing international interest in the KSA market and the confidence that foreign investors have in the Kingdom’s business environment.

Conclusion:

In summary, GAC has played a pivotal role in reshaping KSA’s competitive landscape, as evidenced by the substantial increase in economic concentration filings across various sectors. This reflects the Kingdom’s commitment to economic diversification and growth.

As we witness these transformative changes, GLA and its team have been at the forefront of providing expert legal guidance and support. We have successfully navigated and concluded numerous filings with GAC, ensuring our clients’ compliance with competition regulations while facilitating their business objectives.

Authors: Asad Ahmad, Senior Associate, Salma Farouq, Associate, and Hussain Ali Bu Najimah, Trainee Lawyer

For further information, please contact Alex Saleh (alex.saleh@glaco.com) and Asad Ahmad (asad.ahmad@glaco.com).