June 11th, 2023 Legal Updates

Latest Developments in Saudi Arabia Merger Control

On 18/11/1444H (corresponding to 07/06/2023G), the General Authority for Competition (“GAC”) announced the reduction of the filling fees for examining economic concentration. The new reduced fees are set at 0.0002% of the total annual sales of all parties participating in the transaction which is the subject of the economic concentration application, with a ceiling of SAR 250,000 (c.$66,573) rather than the previous cap of SAR 400,000 (c.$106,518). It was inferred from the market that the previous higher cap had a substantial impact on parties contemplating entering into a commercial arrangement which could trigger the GAC’s filing mandate.

Shortly prior to this resolution, GAC approved the amendment of Article 12(1) of the Implementing Regulations[1] of the Competition Law[2]. This Article related to the annual sales level of SAR 100 million (c.$26.6 million), above which businesses entering into a commercial arrangement would be need to submit a formal economic concentration application for GAC’s approval. The SAR 100 million barrier has now been raised to SAR 200 million(c.$53.2million) by the Board of Directors of GAC’s resolution dated 23/08/1444H (corresponding to 15/03/2023G). The GAC’s amendment to Article 12(1) of the Implementing Regulations appears to be a positive course of action initiated by GAC, as the previous financial threshold proved to have been an overwhelming burden on applicants. The increase in financial threshold was especially welcomed by small and medium enterprises, which are an important part of the Saudi economy, as well as GAC case handlers who deal with a large volume of applications submitted to GAC.

In our view, these improvements will have a good influence on the Kingdom’s economy by encouraging more joint ventures, mergers, and acquisitions, as well as creating job opportunities to support the Kingdom’s national workforce. Furthermore, we expect that GAC will make other amendments to the Competition Law and its Implementing Regulations in the future, in order to implement the best measures and preserve a sustainable and developed market in the Kingdom while adhering to international norms and best practices

[1] issued pursuant to the Board of Directors of GAC Resolution No. 337 dated 25/01/1441H (corresponding to 24/09/2019G).

[2] promulgated by Royal Decree No. M/75 dated 29/06/1440H (corresponding to 06/03/2019G) and entered into force on 24/01/1441H (corresponding to 23/09/2019G).

Author: Fadi Daher, Partner

For further information, please contact Alex Saleh (alex.saleh@glaco.com) and Fadi Daher (fadi.daher@glaco.com).