GAC Issues Third Conditional Approval

In February 2025, the Saudi General Authority for Competition (GAC) issued conditional approval for a significant transaction—its third such decision since the Kingdom’s revised merger control regime took effect in September 2019. This milestone highlights the evolving regulatory landscape in Saudi Arabia, where the GAC has begun taking a more proactive role in assessing competition risks and shaping market behavior through remedies.

The approved transaction involved the full acquisition—100% ownership—of Saudi Arabian Glass Co. Ltd. by the National Company for Glass Industries (Zujaj). Following its investigation, the GAC imposed several remedies to address potential anti-competitive concerns. These conditions focused on price control, maintaining product quality, and ensuring fair contractual relationships with clients and customers.

GAC Review and Market Study

Upon notification of the transaction, the GAC launched a comprehensive market study. These studies are designed to assess whether the proposed deal could result in reduced competition, price increases, or diminished service quality. After evaluating the relevant market conditions, the GAC informed the parties that clearance would only be granted if sufficient remedies were proposed.

The merging parties initially submitted proposed remedies on January 29, 2025. Following back-and-forth discussions and negotiations, the remedies were updated in February and ultimately accepted. This interaction underscores the GAC’s willingness to engage with parties and consider revised commitments to mitigate competition concerns.

Conditions Imposed by the GAC

The final approval included the following six key conditions:

• Price Increases: The parties are prohibited from raising average annual sales prices by more than 10% of the greater of either (a) the change in the Consumer Price Index (CPI), which measures inflation in the Kingdom, or (b) the cost scale of establishments. If the parties wish to exceed this threshold, they must obtain prior approval from the GAC.‍
• Product Quality: To ensure that product quality does not decline post-merger, the parties must provide accreditation certificates confirming that quality is maintained or improved. These must be submitted and updated for five years following the approval date.‍
• Client Contracts: The merged entities may not sign client contracts lasting longer than one year, nor can they include exclusivity clauses. Additionally, upon request by the GAC, the parties must provide copies of client agreements for a five-year period.‍
• Freedom of Choice: Clients must be free to choose which of the two original entities they wish to work with. Agreements must explicitly confirm this freedom.‍
• Compliance Program: The parties are required to participate in the GAC’s competition law compliance program and obtain a compliance certificate. This ensures long-term commitment to regulatory standards.‍
• Annual Reporting: Zujaj must submit a detailed report each year outlining their efforts to meet the obligations outlined in the clearance decision.
  

Lack of Transparency in GAC Decisions

As in previous cases, the GAC did not publish its reasoning or detailed analysis. This lack of transparency is a growing concern for market participants. While the GAC does have discretion to approve deals with conditions, their unwillingness to disclose the rationale behind decisions limits predictability and increases reliance on experienced local counsel who understand GAC tendencies through prior engagements.

Previous Conditional Approvals

Before this decision, the GAC issued two conditional clearances in 2023:

• In June 2023, it approved Saudi Tadawul Group Holding Company’s acquisition of a 51% stake in Direct Financial Network Co. (DirectFN) through Tadawul Advanced Solutions Co. (Wamid).
• In August 2023, it conditionally cleared the acquisition of 100% of Faden Media Agency by Arabian Tech Contracting Co.

These cases reflect the GAC’s increasing readiness to impose tailored remedies in complex deals, often mirroring practices of more established global competition authorities.

Remedy Discussions: The GAC’s Approach

The GAC initiates remedy discussions when it believes a transaction may raise significant competition concerns. These concerns can arise during internal analysis or following a report by the case team. Occasionally, third-party stakeholders can also play a role, especially if the GAC conducts a market study that invites external input.

However, unlike competition authorities in Kuwait, Egypt, or Morocco, the GAC does not publish notifications of received transactions. As a result, third parties are generally unaware of a filing unless the GAC reaches out or a market study becomes public. In some cases, third parties who suspect a deal will be notified may proactively approach the GAC to express concerns.

When the GAC considers conditional approval, it typically invites the parties to remote discussions—often with their legal counsel. During these calls, the GAC outlines specific competition concerns and allows the parties to respond. This phase often involves substantial Requests for Information (RFIs), where the authority seeks additional documents, market data, or internal analyses to better assess the potential impact of the transaction.

Strategy for Remedy Negotiations

Once the GAC feels it has a solid understanding of the transaction’s impact on the Saudi market, it will request that the parties propose formal remedies. While the authority may suggest general directions, it tends to avoid specifics unless prompted. Therefore, it is essential for parties to:

• Proactively suggest remedies and explain their relevance;
• Include evaluations of remedy effectiveness and commercial impact;
• Address enforcement details like duration and monitoring mechanisms.

In cross-border transactions, sharing insights from other jurisdictions can be helpful. However, the GAC’s limited experience sometimes leads to overreaching. For example, a remedy that fits an EU or U.S. context may be excessive in Saudi Arabia. Parties should be ready to explain why certain remedies may be appropriate elsewhere but not necessary domestically.

Conclusion

As the GAC continues to mature, its merger review process is becoming more structured. But the current lack of transparency and occasional overreach underscore the importance of legal strategy and active engagement. When remedies are on the table, parties must communicate clearly and push for conditions that align with the specific competitive landscape in Saudi Arabia.

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