In a significant development for the Saudi Arabian business scenario, the General Authority for Competition (GAC) recently declared alterations to its merger control notification thresholds. They have introduced a new local nexus test and a minimum turnover threshold for the acquired entity. These changes come amidst GAC’s active role in merger enforcement, which includes newly added cases where behavioral and structural remedies were mandated as conditions for deal approvals.
According to JDSupra, these proclamations denote a noteworthy progression in the operations of the General Authority for Competition. These modifications look likely to enhance the already significant presence of the GAC in merger regulation, as it aggressively pursues its agenda to ensure fair competition and regulatory compliance.
The amendments to GAC’s merger control notification thresholds comprise of two major addendums. To start with, a local nexus test apply to cases where both, the acquirer and the acquired entity, neither have a physical presence in the Kingdom of Saudi Arabia nor derive revenues from there, but hold a combined market share of 40% or more of a related market.
Then there is the introduction of a minimum turnover threshold for the entity being acquired. As per new provisions, only transactions where the turnover of the acquired entity is SAR 100 million or more would require a notification to the GAC.
These changes seem to serve the dual-purpose of not only assisting in the detection and regulation of potentially monopolistic mergers, but also ensuring a smoother merger process for corporations that fall beneath the specified thresholds.
The GAC’s proactive approach towards ensuring a balanced competitive environment has led them to impose behavioral and structural remedies as prerequisites for deal approvals in recent cases. This aspect signals a more stringent approach towards merger control, reflecting the GAC’s agenda of maintaining a level-playing field for all participants in the market.
With these changes, companies contemplating acquisitions would have to reassess the impact of GAC’s revised thresholds on their merger prospects. Legal professionals working in corporations and law firms worldwide would need to remain abreast such regulatory changes to ensure accurate deal processing and legal compliance.