Saudi Arabia Merger Control Update: Changes to the GAC Merger Review Guidelines in respect of the financial threshold for submitting an Economic Concentration notification to GAC

On 1 November 2023, the General Authority for Competition (GAC) of the Kingdom of Saudi Arabia (KSA) announced an important change to the GAC Merger Review Guidelines dated 20/11/1442H (corresponding to 30/06/2021G) (the Guidelines) relating to the financial threshold which can trigger the requirement to file an Economic Concentration notification with GAC. This change will likely reduce the number of Economic Concentration notifications that need to be made to GAC.

According to the KSA Competition Law, issued pursuant to Royal Decree number M/75 dated 29/06/1440H (corresponding to 06/03/2019G) and its Implementing Regulations, issued by the GAC Board of Directors pursuant to decision No. (337) dated 25/01/1441H (corresponding to 24/09/2019G (together, the Competition Legislation), anyone seeking to participate in an Economic Concentration (which includes without limitation mergers and acquisitions and joint ventures) must notify the GAC at least 90 (ninety) days before completion of the transaction if the following conditions are met:

1. the combined global turnover of the entities party to the Economic Concentration transaction exceeds SAR 200 million (the Turnover Threshold Test); 
2. the transaction results in a change of control; and 
3. the transaction has a nexus to KSA market.

GAC previously issued the Guidelines which acts as official guidance to help explain GAC’s approach to interpreting and applying the Competition Legislation but does not amend or supersede the Competition Legislation. On 1 November 2023, GAC announced that, in relation to mergers and acquisitions, it will be analysing the Turnover Threshold Test based on the following three elements: 

1. the total global annual turnover of the parties to the Economic Concentration is more than SAR 200 million;
2. the target(s)’ annual turnover is more than SAR 40 million; and
3. the total annual turnover of all parties to the transaction in the KSA is more than SAR 40 million.

(Further clarification is needed from GAC to confirm to what extent the above thresholds will apply to other types of transactions (other than mergers and acquisitions) that fall within the ambit of Economic Concentrations). 

One of the key elements of Saudi Vision 2030 is to make the KSA an attractive market for both investment and undertaking business. It is likely that GAC hopes that this new change in the Guidelines will reduce the need for reporting Economic Concentrations which do not substantively affect competition in the KSA.

Clyde & Co’s corporate team in Riyadh has been assisting a number of international and local clients on KSA Competition Law matters, including advising on Economic Concentration transactions and assisting with filing notification applications to the GAC. 

If you would like further information on any of the matters referred to in this article, please contact us.