The General Authority for Competition in Saudi Arabia (the "GAC") has introduced additional merger control filing thresholds for transactions which are notifiable to GAC. This article sets out the new thresholds introduced by GAC, who they apply to and the effect these new thresholds will have on the Saudi market.
New Antitrust Filing Thresholds Introduced by the Saudi General Authority for Competition
In its decision dated 1 November 2023, the GAC has introduced additional merger control filing thresholds for economic concentrations to be notifiable to the GAC. In effect, the new thresholds introduce a target revenue and local nexus requirement, narrowing the scope of notifiable transactions so that smaller transactions lacking a sufficient local nexus are no longer notifiable to the GAC. The GAC further details these new thresholds in the updated GAC Merger Review Guidelines issued earlier this month (the "Guidelines"). The new thresholds are already in effect.
This is a welcome change by the GAC and comes on the heels of the GAC doubling the minimum revenues threshold for notifiable merger control flings from SAR 100 million (approx. US$ 26.6 million) to SAR 200 million (approx. US$ 53.3 million) and decreasing the filing fee cap from a maximum of SAR 400,000 (approx. US$ 106,000) to a maximum of SAR 250,000 (approx. US$ 66,000).
The Competition Regulations and Current Applicable Thresholds
Competition in Saudi Arabia is governed by the Competition Regulations issued pursuant to Royal Decree No. (M/75) dated 06/03/2019, and its Implementing Regulations issued by a decision of the board of directors of GAC No. (337) dated 24/09/2019, both as amended from time to time (together, the “Competition Regulations”).
With the new thresholds now in effect, a transaction is notifiable to the GAC if it satisfies the following:
- Economic concentration that leads to a change of control: the transaction will result in an "economic concentration" (as defined in the Competition Regulations). This includes the transfer of assets, shares or obligations, or the joining of administrations or management, in all cases in a manner that leads to a change of control in the target. The definition is broad and captures joint ventures as further detailed in the Guidelines;
- Global revenues of the controlling groups: the aggregate global annual revenues of the controlling groups of the transaction parties exceed SAR 200 million (approx. US$ 53.3 million);
- Global target revenues: the aggregate global annual revenues of the target(s) exceed SAR 40 million (approx. US$ 10.6 million);
- Local nexus revenues of the controlling groups: the aggregate annual revenues generated in Saudi Arabia by the controlling groups of the transaction parties exceed SAR 40 million (approx. US$ 10.6 million).
The new target revenue and local nexus thresholds are a welcome development that further showcases the GAC's continued interest in elevating the Saudi Arabian market and maintaining healthy competition. This pragmatic approach to merger control filings in Saudi Arabia will exempt smaller transactions lacking a sufficient local nexus from notification requirements, reducing the administrative and cost burdens on businesses worldwide.