Background: The General Authority for Competition in Saudi Arabia (the GAC) has issued updated guidelines on the assessment of economic concentrations. The guidelines expands the "control" principle and further details how merger filing thresholds and certain exemptions are applicable to mergers, joint ventures, and investment funds.
In its decision dated 8 April 2025, the GAC has further updated its Economic Concentration Review Guidelines (the 2025 Guidelines) expanding the "control" principle and further details how merger filing thresholds and certain exemptions are applicable to mergers, joint ventures, and investment funds. The 2025 Guidelines are already in effect.
The material changes introduced by the 2025 Guidelines include:
- expanded the "control" principle - used to determine whether a notifiable economic concentration transaction will take place for a potential transaction – by defining "negative control" and "positive control"
- further to the GAC's update on merger control filing thresholds from November 2023, further clarified how such thresholds apply to mergers and joint ventures; and
- provided exemptions from merger control filings with the GAC for economic concentrations involving joint ventures and investment funds under certain conditions.
The Competition Regulations, Applicable Thresholds and further updates based on the 2025 Guidelines
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").
Further to our article on New Antitrust Filing Thresholds Introduced by the Saudi General Authority for Competition dated 14 November 2023, we now restate the relevant elements to determine whether a transaction is notifiable to the GAC, reflecting the additional colour provided by the 2025 Guidelines. A transaction is notifiable to the GAC if it satisfies the following:
1. 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 2025 Guidelines;
- The 2025 Guidelines has expanded the concept of
"control" to include:
- Negative control – the ability to block key strategic or commercial decisions of the relevant business. For example, a party having veto rights as reserved matters included in their shareholder agreements would be deemed "negative control" rights if such party is able to prevent the business from taking certain actions (e.g. potentially to include veto rights to approve the business plan, budget or executive appointments).
- Positive control – the ability to impose or direct such decisions (e.g. the right to unilaterally appoint board members)
2. 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);
3. Global revenues:
- relating to an acquisition: the aggregate global annual revenues of the target(s) exceed SAR 40 million (approx. US$ 10.6 million); or
- relating to a merger/joint venture: the aggregate global annual revenues of at least two of the controlling groups of the transaction parties in the merged entity/joint venture exceed SAR 40 million (approx. US$ 10.6 million); and
4. Local nexus revenues of the controlling groups: the aggregate annual revenues generated in Saudi Arabia by the controlling groups of the transaction parties (including the target in an acquisition) exceed SAR 40 million (approx. US$ 10.6 million).
2025 Guidelines: Merger Control Filing Exemptions for Joint Ventures and Investment Funds
1. Joint Venture Exemptions for Untapped Markets and Products
The Updated Guidelines introduce new exemptions for joint ventures focused on markets or products not currently present in Saudi Arabia. The GAC may consider such joint venture transactions exempted if the transaction satisfies certain standards, including:
- the joint venture's products are not yet available or are otherwise limited by distribution in Saudi Arabia; or
- the controlling groups of the transaction are not current or potential competitors of the product in the relevant market.
2. Investment funds and similar financial investment companies exemptions
The Updated Guidelines now differentiate between investment funds/similar financial investment companies effecting transactions for purposes diversifying investments and preserving value (Passive Entities) and those that that potentially acquire competitors.
The GAC evaluates the exemption based on two main criteria:
- the transaction's sole objective is to participate in a business without influencing its market behaviour; and
- the Passive Entity does not own a controlling stake in any businesses that competes with the relevant business
Deadline to Complete
The GAC has also introduced a formal validity period of one year for approvals issued in respect of economic concentration transactions. If a transaction does not complete within twelve (12) months from the date of the GAC's decision, a new filing will be required.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
