In April 2025 for the first time, the Saudi General Authority for Competition (GAC) has imposed a structural remedy in conjunction with behavioral commitments as part of a conditional merger approval. The decision pertains to the acquisition of 100% of ChampionX Corporation by Schlumberger Limited (SLB). The decision signals a more assertive and sophisticated approach by the GAC in addressing potential competition concerns arising from high-impact transactions in the oil and gas sector and beyond.
Behavioral remedies
The GAC imposed a series of behavioral commitments designed to safeguard continuity of supply and prevent potential market foreclosure in the Kingdom's downstream oil and gas sector. The commitments seek to compel ChampionX to continue to supply at competitive terms Quartzdyne products and services—key inputs in oilfield operations—to existing customers post-transaction. These commitments reflect the GAC's concern that the merger could theoretically restrict access to essential technologies or alter commercial conditions in a way that would disadvantage local market participants.
To address these concerns, the parties have committed to offer supply agreements to any existing customer who requests them, ensuring continuity for a period of four years following closing. The terms of these agreements are required to mirror pre-transaction practices in terms of pricing, quantities, and delivery conditions. Pricing will remain anchored at 2024 levels, subject only to annual adjustments based on predefined industry indices, thus shielding customers from potential post-merger price inflation.
Moreover, the supply agreements must accommodate reasonable increases in demand. With this requirement the GAC intends to accommodate expanded operations or participation in competitive tenders. Thereby the GAC seeks to ensure that Saudi-based operators are not competitively disadvantaged. Exceptions to these obligations are narrowly tailored, applying only in situations involving legal or regulatory prohibitions, reputational risk, or genuine capacity constraints.
Overall, the behavioral remedies imposed by the GAC in this case reflect a clear sensitivity to maintaining supply chain continuity and ensuring competitive neutrality in the downstream oil and gas sector—an industry of strategic importance to the Saudi economy. By requiring SLB and ChampionX to guarantee continued access to Quartzdyne products and services on non-discriminatory terms, the GAC is addressing concerns that the merger could lead to supply disruptions, abuse of pricing power, or exclusionary practices that would negatively impact local market participants. This approach underscores the authority's increasing focus on mitigating even theoretical competition risks where global transactions may have localized impacts for critical sectors such as the oil and gas within the Kingdom.
Structural remedies
Complementing the behavioral commitments outlined above, the GAC took an unprecedented step by requiring a structural remedy as a condition of approval—marking a notable first in Saudi merger control regime.
The structural remedy centers around the divestiture of US Synthetic Corporation, a US subsidiary of ChampionX. US Synthetic specializes in the development and manufacture of synthetic polycrystalline diamond cutter inserts and related industrial tools.
These products are integral to the oil and gas sector—a strategically important industry in the Kingdom—and have potential overlaps with SLB's existing product lines. Post-transaction, US Synthetic would have become an indirect subsidiary of SLB, consolidating market power in upstream and downstream segments of the supply chain. To mitigate this concern, ChampionX entered into an equity purchase agreement with LongRange Capital for the sale and transfer of 100% of US Synthetic's equity interests. The GAC's approval of the overall transaction is expressly conditional on the completion of this divestment, which must occur following the main transaction closing. In addition, the parties are obligated to notify the GAC of any material changes related to the divestment—such replacement of the acquirer, retained control or influence by the merging parties, or any narrowing of the scope of the divested business that could compromise its ability to function as an independent, viable, and competitive entity.
Prior to their decision in the SLB/ChampionX merger, the GAC has relied on behavioral remedies, favoring conduct-based commitments to manage competition risks. The introduction of a structural remedy in this case—particularly within the Kingdom's strategically vital oil and gas sector—demonstrates a new level of regulatory assertiveness. It reflects the GAC's growing willingness to intervene more substantively where a transaction could lead to long-term structural changes in a critical industry. Given this new development parties contemplating transactions with potential impact on competition in Saudi Arabia, should anticipate closer scrutiny; in particular, where transactions concern strategic sectors.
Way forward
The GAC's decision to impose both structural and behavioral remedies marks a notable step forward in its merger control practice. Still, the situation is still fluid. The authority's approach towards remedies—both behavioral and structural—are still evolving. Given the limited precedence there remains ambiguity as to both the material approach to remedies taken by the GAC as well as procedural issued.
One key area for improvement is the depth of reasoning provided in public communications. While the commitments imposed are generally clearly communicated, the underlying assessment—such as market definition, theories of harm, and the rationale behind the specific remedies imposed and their scope—is typically not disclosed.
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