The Saudi General Authority for Competition (GAC) continues to develop its antitrust and competition regulatory framework to bring it in line with international standards. These efforts are part of the Kingdom's broader goal of positioning itself as a hub for investment and economic diversification under the Kingdom's blueprint for building a brighter future for Saudi Arabia, known as Saudi Vision 2030. In a continuation of these efforts, on April 8, 2025, the GAC issued its fifth edition of the Economic Concentration Review Guidelines (the "Guidelines").
These Guidelines, formerly known as the Merger Review Guidelines, implement the GAC's merger control framework as established by the KSA Competition Law and its Executive Regulations. The revised Guidelines aim to enhance transparency and clarify provisions to help local and foreign companies comply with notification procedures. They provide essential refinements and clarity on what constitutes an Economic Concentration, when it must be notified to the GAC, and what the GAC considers during its review.1
Evolution of the Merger Control Regime
The GAC first introduced a merger control regime with turnover-based thresholds in 2019. Initially, the threshold was set broadly at SAR 100 million total combined turnover of participating entities, without a local nexus requirement. This often captured mergers with no connection to the Saudi market or those unlikely to affect competition in the country.
In November 2023, the GAC introduced a new three-legged cumulative financial threshold that included a local nexus requirement for the first time. This threshold required a filing if the total combined annual worldwide sales of the parties exceeded SAR 200 million, the total annual worldwide sales of the target entities exceeded SAR 40 million, and the total annual sales of the parties in Saudi Arabia exceeded SAR 40 million. This change was generally well received by the industry, helping to reduce unnecessary filings and allowing the GAC to focus resources on transactions likely to have a potential anti-competitive effect in the Kingdom. However, points of criticism remained, such as the threshold potentially still being too low and the local nexus not requiring the target to have revenue in Saudi Arabia.
The latest version of the Guidelines further develops the notification thresholds, provides guidance on the definition of "control," introduces a validity period for GAC decisions, and adds new exemptions. These updates represent a substantial step forward in the development of merger control in Saudi Arabia, bringing the regime into closer alignment with international standards and recommended practices.
Key Updates Based on the 2025 Guidelines
The material changes introduced by the 2025 Guidelines include:
- More detailed application of the notification threshold tailored per transaction type (acquisitions, mergers, and joint ventures).
- A more comprehensive explanation of the concept of control and the circumstances in which a change of control is deemed to occur.
- Introduction of a formal validity period for GAC decisions on merger control reviews.
- Introduction of new exemptions from notification for specific cross-border joint ventures and acquisitions by passive investment funds under certain conditions.
Notification Thresholds
Previously, the financial threshold to notify the GAC of a so-called economic concentration involved meeting all three cumulative conditions based on total worldwide annual sales of all parties, total worldwide annual sales of the target, and total annual sales in Saudi Arabia of all parties. The 2025 Guidelines amend the financial thresholds and tailor them per transaction type:
Acquisitions: An acquisition is notifiable if all three of the following cumulative conditions are met:
- The total worldwide annual sales value of the Economic Concentration parties exceeds SAR 200 million.
- The total worldwide annual sales value of the target exceeds SAR 40 million.
- The total combined annual sales value in Saudi Arabia of all parties exceeds SAR 40 million, with the Target contributing to this figure.
Helpfully, the Guidelines clarify that for acquisitions, the relevant parties for revenue assessment are the acquirer and the target, excluding the seller. This addresses a previous criticism where the seller's activities could trigger a filing even if the buyer and target had no Saudi nexus.
A significant improvement is the explicit requirement for the target entity to generate revenue within the KSA for the local nexus threshold to be met. However, there is currently no de minimis threshold for the target's revenue contribution, meaning even minimal target sales in KSA could trigger the notification requirement if other thresholds are met.
Mergers & Joint Ventures: Mergers and joint ventures are notifiable if all three of the following cumulative conditions are met:
- The total worldwide annual sales value of the Economic Concentration parties exceeds SAR 200 million.
- The total worldwide annual sales value of at least two of the parties exceeds SAR 40 million. This condition helps to exclude transactions involving only one smaller undertaking.
- The total combined annual sales value in Saudi Arabia of all parties exceeds SAR 40 million.
The Guidelines provide clarity on how the thresholds apply to mergers and joint ventures, assessing the relevant parties as those that will form part of the newly concentrated entity. This resolves long-standing interpretive questions previously addressed only through GAC practice.
The clarification of the notification thresholds in the Guidelines provides much more certainty when assessing whether a transaction requires a GAC merger control notification.
Control
The concept of "control" is central to the definition of "Economic Concentration." The new Guidelines provide a more detailed explanation of this concept and when a change of control would occur in the context of an Economic Concentration. The latest version of the Guidelines defines "control" as "the ability of an entity to exert decisive influence over another entity, either individually or jointly, influencing its strategic or operational decisions, which may have a significant impact on the authority to make decisions regarding the entity's strategic and business actions, including approving the budget, determining major investments, appointing senior managers, etc."
The Guidelines introduce and define positive control (the ability to impose decisions) and negative control (the ability to block decisions). A transaction that results in an acquisition of either positive or negative control would constitute an Economic Concentration. Control can be established through legal rights or on the basis of de facto influence arising from contractual relations, financing, or familial ties.
A welcome clarification is the explicit exclusion of statutory minority shareholder protection rights from the definition of control. Previously, the GAC's narrow interpretation could consider such rights sufficient for a notifiable Economic Concentration, even with minimal shareholding. The new Guidelines clarify that minority veto rights relating to constitutional documents, capital adjustments, liquidation, or large investments often serve as protection of interests rather than evidence of decision-making power amounting to control.
Under the new Guidelines, a change of control giving rise to an economic concentration occurs when a party with no previous control gains positive or negative control, or when a party with negative control (alongside others with negative control) acquires positive control.
Validity of GAC Decisions on Economic
Concentrations
Following a merger review notification, the GAC can either approve, conditionally approve, or block an Economic Concentration. The Competition Law requires notification at least 90 calendar days prior to completion. The transaction cannot be completed until GAC approval or conditional approval is received or the review period lapses.
Neither the Competition Law nor previous Guidelines versions specified a validity period for a GAC decision. The new Guidelines introduce a validity period of one calendar year for any approval or conditional approval. If the transaction is not completed within this period, a new merger control notification must be submitted. Parties may request an extension to the one-year validity period with acceptable justifications.
Exemptions From Notification Requirements
The Guidelines introduce new categories of transactions that may be exempt from notification.
- State Owned Entities: The Competition Law and its Implementing Regulations expressly exempt KSA Government authorities or wholly-owned companies that are solely authorized by the government to provide specific products or services. The GAC may also grant other exemptions if an Economic Concentration is expected to improve market performance or benefit consumers beyond any limitation of competition.
- Certain Joint Ventures: The Guidelines provide that a joint venture may not constitute a notifiable Economic Concentration if it meets certain criteria. This exemption applies to joint ventures related to the manufacture of a product not currently produced in KSA (or only distributed in a limited part for technical reasons) and whose partners are neither current nor potential competitors of that product. This pragmatic approach is intended to facilitate investment. It remains unclear whether a short-form notification is required to confirm this exemption.
- Certain Investment Funds: A newly introduced exemption applies to certain investment funds or similar financial investment companies. Referred to as Passive Entities, these are exempt when the acquisition's sole objective is to obtain shares without intervening directly or indirectly in the management, and the fund does not own a controlling stake in companies competing with the target. The GAC acknowledges that such acquisitions may not require notification if they do not have a tangible impact on competition in any relevant KSA market.
Other Aspects and Remaining Areas for Improvement
While these revisions reflect important enhancements to the merger control framework in the Kingdom, there are areas where further clarity or improvement is sought by market participants:
- Transparency: There is a noted lack of transparency in GAC decisions, particularly regarding the reasoning and detailed analysis behind conditional approvals. Unlike many other jurisdictions, the GAC does not publish notifications of received transactions, making third parties generally unaware of filings unless contacted. Due process considerations and procedural guarantees could be further aligned with more mature jurisdictions.
- Procedural Timelines: While the 90-day statutory review period is codified, the Guidelines do not specify a timeframe for the preliminary review phase or for short form filings, which could enhance transparency and predictability. Calls for quicker, tiered merger approval timelines are often made.
- Filing Fees: The filing fees, capped at SAR 250,000 (approx. USD 66,700), are considered considerably higher compared to other jurisdictions like the EU.
- Substantive Analysis & Policy: Commentators have noted the need for improvement in the substantial analysis of cases, including building consistent tests to better assess anti-competitive concentrations. There are questions regarding the balancing of competition goals with the increasing importance of industrial and macroeconomic policy in the country as set out in the Kingdom's Vision 2030 strategic plan, especially with regard to the role of SMEs.
Conclusion
The April 2025 Economic Concentration Review Guidelines represent significant progress in developing Saudi Arabia's merger control regime. The GAC is actively scrutinizing transactions and playing a leading role in the region. The refinements related to notification thresholds, the clarification of the control concept, and the introduction of new exemptions are welcome developments that enhance legal certainty and regulatory predictability.
However, the regime is still evolving rapidly. Continued engagement with stakeholders and further refinement of the Guidelines will be essential to address remaining ambiguities, such as the absence of a de minimis target revenue threshold for acquisitions and improving transparency in procedural timelines and decisions. Proactive risk management, early engagement with competition counsel, and pre-notification discussions with the GAC are strongly advised for parties involved in M&A or joint ventures in or connected to the Kingdom.
Drawing on deep experience in the Kingdom, underpinned by over a quarter century with an office in Riyadh, Baker Botts' seamlessly integrated competition law, corporate and litigation teams provide comprehensive assistance to clients across the full spectrum of Saudi Arabian competition law matters. This includes expert guidance on GAC investigations, skilled representation in administrative and civil courts, and efficient handling of merger filings to secure timely clearances. Our long-standing presence ensures we possess unparalleled insight into the local legal and regulatory landscape, effectively addressing the practical needs of companies investing and operating in the Kingdon and MENA region.
Footnote
1. Pursuant to the Saudi Arabian Competition Law, its Implementing Regulations and the Guidelines, an "Economic Concentration" is defined as "any action that results in a total or partial transfer of ownership of assets, rights, shares or liabilities of a firm to another by way of merger, acquisition or the creation of a full function joint venture or any other form that leads to the control of a firm(s) including influencing its decision, the organization of its administrative structure, or its voting system."
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