On 20 January the UAE announced the long anticipated new notification thresholds. The new turnover threshold of AED 300 million (approx. USD 81 million) will apply starting send of March individually, in addition to the established 40% market share threshold. All transactions not closed by late March will have to be notified, if they meet the new turnover threshold.
New turnover threshold
The UAE Council of Ministers on 20 January 2025 issued Council Decision 3/2025, which defines the turnover notification thresholds. The turnover notification threshold was initially announced in late 2023 with the new UAE Competition Law, Federal Law 36/2023. However, the new Competition Law did not define the turnover threshold or regulate the relationship between the established market share and the new turnover thresholds. Council Decision 3/2025 now provides that notification of a merger or other economic concentration is required, where the parties to the transaction in the last fiscal year either:
- had a combined market share in the relevant market in the UAE exceeding 40%; or
- had a combined turnover in the relevant market in the UAE exceeding AED 300 million (approx. USD 81.7 million).
Overlap and vertical relation
Council Decision 3/2025 does not clarify whether there must be an overlap or vertical relationship between the business of the target and the other parties to trigger a filing. Under the old regime—that only included the market share based threshold—the UAE competition authorities took the position no such relationship is required and that any one party alone—e.g. the acquirer alone—could meet the threshold and trigger a filing obligation. It appears that the UAE authorities will continue holding this position under the new regime. Hence, one party alone can meet the market share or turnover threshold. The relevant market is not limited to the products and services the target offers in the UAE. Instead, the UAE authorities—when considering whether the thresholds are met as well as in their assessment of the transaction—will determine the relevant market based on the target's global activities.
Exemption for UAE government owned entities
Aside from defining the new turnover thresholds Council Decision 3/2025 repealed Ministerial Resolution 13/2016. This decision made sense, since Ministerial Resolution 13/2016 had established the 40% market share threshold of the old regime. Hence, by establishing the new thresholds—although the market share threshold remained the same—Council Decision 3/2025 replaced Ministerial Resolution 13/2016 in this aspect. However, Ministerial Resolution 13/2016 also defined what constituted a UAE government owned entity within the meaning of the old competition law. Ministerial Resolution 13/2016 provided that entities in which the UAE federal government or the government of any of the individual emirates held at least 50% were 'government owned' within the meaning of the old competition law and, thereby, exempted from the UAE merger control regime. With Cabinet Decision 3/2025 now repealing Ministerial Resolution 13/2016 in its entirety, it remains unclear what would be deemed a UAE government owned entity within the meaning of the New Competition Law, and thus exempted from the new UAE merger control and antitrust regimes. While there are good arguments to assume that the UAE authorities will continue to apply the definition provided in Ministerial Resolution 13/2016 in practice, clarification is needed.
Timeline for application
It is not entirely clear to which transactions the new thresholds will apply. Council Decision 3/2025 provides that it will enter into force 60 days after it was published in the UAE Official Gazette, which would mean that it would enter into force at the end of March. The decision, however, does not regulate what criteria will be
applied to determine whether a transaction is caught by the new regime. It appears that the authority takes the position that the decisive criteria is closing, and the new turnover thresholds applies to all transactions not closed before 24 March 2025. Still, since the authorities have not issued any official guidelines, there remains uncertainty. Parties contemplating transactions that meet the new turnover threshold should monitor announcements form the authority.
Way forward
Companies engaged in transactions with link to the UAE—whether these are established through UAE subsidiaries, UAE assets, or exports to the UAE—will have to consider their exposure under the new regime. Given that the regime appears to apply to all transactions not closed by end of March, the entry into force of the UAE merger control regime may disrupt ongoing transactions. That Eid El Fitr—the holiday following Ramadan—will begin end of March, could inject additional challenges. Parties may need to reconsider closing timelines.
Since the UAE is not party to the Hague Document Convention legalization of documents cannot be handled using apostille. Instead, legalization must follow often lengthy processes bilaterally agreed between the UAE and the countries from which relevant documents originate. Hence, parties engaged in transactions with link to the UAE should consider initiating legalization processes early.
Finaly, parties should be aware that under the new UAE merger control regime transactions that are not actively cleared by the UAE authorities are deemed opposed to. Following the authorities confirming completeness of the submission, they have 90 days to issue a decision on the transaction. This review period may be extended by an additional 45 days if deemed necessary by the authorities. If no decision is issued within the (extended) review period, the transaction is deemed rejected. This departure from the old regime—under which a transaction was considered cleared if no decision was issued within the review period—introduces uncertainty for companies. This is particularly concerning given the limited experience and capacity of UAE competition authorities.
Parties can appeal the authorities' decisions before the competent courts within 30 days of their decision being issued. However, the New Competition Law does not explicitly specify when the appeal period begins if no decision is issued. We would expect that the deadline for appeals would commence once the review period lapses. Still, further clarification on this point would be welcome.
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.
