GAC Issues Third Conditional Approval

In February 2025, the Saudi General Authority for Competition (GAC) granted conditional approval for a transaction. This marks the third time that they imposed remedies, since the Kingdom’s new merger control regime came into force in September 2019. The transaction concerned the acquisition of 100% of Saudi Arabian Glass Co. Ltd. by the National Company for Glass Industries (Zujaj). The remedies concerned measures addressing price control, quality maintenance, and restrictions on contracting with customers.

After receiving the notification on the Saudi Arabian Glass Co. Ltd. acquisition, the GAC initiated a market study. This resulted in the GAC suggesting to the parties that they would only clear the transaction under adequate conditions. The parties initially submitted a set of proposed remedies to the GAC on 29 January 2025.Following negotiations with the GAC, the parties updated these proposed remedies in February, which were implemented by the GAC. Ultimately, the GAC cleared the transaction with the following conditions:

• the parties undertake not to increase the average annual sales prices by more than 10% of the average change in the Consumer Price Index (CPI) in the Kingdom or in the cost scale of establishments on an annual basis—whichever is greater. The parties are allowed, under specific circumstances, to exceed this limit after obtaining prior approval from the GAC;
• the parties must provide accreditation certificates that demonstrate the ongoing maintenance or improvement of product quality. These certificates must be updated and submitted whenever renewed, for a period of five years from the date of the decision;
• the parties may not enter into agreements with clients that have a term exceeding one year, or require clients to exclusively deal with the parties involved in the merger. Moreover, the parties must for a period of five years upon request of GAC must submit copies of agreements with clients to the GAC;
• the parties must ensure that clients are free to choose which of the two merged entities they deal with. Agreements signed with clients must explicitly confirm this freedom of choice;
• the parties must submit to the GAC’s competition law compliance program and obtain a compliance certificate issued by the GAC; and
• the Zujaj must submit an annual report to the GAC, detailing the progress made in meeting the obligations set out in the clearance decision.

The GAC did not disclose their findings and reasoning in their decision. This practice is in line with prior cases. In 2023 the GAC issued two conditional clearances:

• in June 2023, the GAC granted its first conditional approval for the acquisition of a 51 percent stake in Direct Financial Network Co. (DirectFN) by Saudi Tadawul Group Holding Company through one of its wholly owned subsidiaries, Tadawul Advanced Solutions Co. (Wamid) (for an overview of this decision see our client brief on the case); and
• In August 2023, the GAC issued its second clearance for the acquisition of 100% of Faden Media Agency by Arabian Tech Contracting Co. (for an overview of this decision see our client brief on the case).

The GAC’s decision-making process, particularly in the context of its conditional approvals, raises questions regarding the level of transparency in the authority's review and assessment procedures. While the GAC has the discretion to approve transactions with conditions, its reluctance to disclose their reasoning behind their decisions create uncertainty for parties. Effectively, the lack of transparency leaves parties only to rely on experiences of local counsel gained through their involvement in negotiations over remedies with the GAC.

The GAC will initiate discussions over remedies where their assessment of a transaction notified to them suggests that the transaction may raise relevant competition concerns in the Kingdom. Such concerns may be discovered by the case team themselves during their review or by the heads of departments once the case team submits their report on the transaction. Third party intervention has so fardiscussions,ed a relevant role in initiating discussions on remedies. Unlike other authorities in the region such as the Kuwaiti Competition Protection Authority, the Egyptian Competition Authority, and the Moroccan Competition Council the GAC does not announce notifications they receive. Hence, third parties will typically not be aware if and when filings have been made to the authority. Third parties could engage the GAC on transactions they believe will be notified to the GAC. However, more frequently they will become aware of and engage in review processes of the GAC where the GAC conducts a market study during their review.

Where the GAC determines that they may issue conditional approval of a transaction, they will initiate discussions with the parties. Such discussions can often be limited to legal counsel and will be held remotely. During these discussions, the case team will outline their concerns and allow the parties to address these. Typically, the negotiations will be accompanied by material RFIs. Also, the GAC may reach out to possibly affected third parties during this phase.

Once the authority is stratified that they have a comprehensive understanding of the transaction and its impact on competition in Saudi Arabia, they will request the parties to propose remedies. So far, the GAC has been open to providing guidance on what type and scope of remedies they would consider appropriate. However, unless pressed on details, such guidance will remain unspecific. Hence, when negotiating remedies with the GAC parties should actively address the scope of possible remedies, provide their view on possible remedies including effectiveness and impact on the parties’ business, and address secondary issues such as time limits for remedies and monitoring. Where remedies for a transaction are discussed in several jurisdictions, it may be helpful to provide details on negotiations with other authorities to ensure consistency of remedies. However, when doing so parties should be conscious of the lack of experience of the GAC and their staff. This has led to case handlers seeking to implement remedies that while appropriate in one jurisdiction may be overkill in the Saudi context. In particular, in cases where a transaction may have significant implications in one jurisdiction but limited impact in Saudi Arabia. To avoid such overreach parties must be prepared to explain why some remedies may be appropriate in some but not in all jurisdictions. Overall, the parties should actively engage the GAC when remedies may be imposed to ensure these are acceptable and reasonable given the Saudi scope of the transaction and negotiations progress in a timely manner.