Jordanian Merger Control. The Unpredictable Timing Item.

In August 2023, the Jordanian government introduced revenue based notification thresholds that apply alongside the existing market share thresholds. Furthermore, in 2023 the Jordanian legislator introduced amendments to the Competition Law providing for the Kingdom’s merger control to explicitly catch foreign-to-foreign transactions. Both amendments have led to a noticeable increase in notifications, which has highlighted shortcomings of the merger review procedure in Jordan. The most significant hurdle posed by the Jordanian regime is the requirement that all clearance decisions must be approved by the authority’s board, which meets only three times a year.

Notification thresholds

Notification of an economic concentration is mandatory, where the transaction (1) leads to a change of control over the target, and (2) meets one of the following thresholds is met:

• the collective market share of the parties in the relevant market, in Jordan is at least 40 percent;
• the annual, Jordanian turnover of one party is at least JOD 2 million (approx. USD 2.8 million); or
• the annual, Jordanian turnover of all parties collectively is at least JOD 7 million (approx. USD 9.8 million).

Uncertain review timeline

Once a notification is received, the Competition Directorate at the Jordanian Ministry for Industry, Commerce and Trade will set up the case team that will review the transaction. It will typically take between 5 and 10 business days for this process to resolve and the case handler contacting counsel. While a pre-filing review is not contemplated in the Competition Law, a pre-filing review will follow set up of the case team. In no to low issues cases this pre-filing review will take between 10 and 20 business days, during which the authority will assess whether the filing is complete and may issue first, minor RFIs. Once the authority is satisfied that the filing is complete, they will make a public announcement of the notification and confirm start of the statutory review period. The material review on the clock will take between 30 to 40 business days in no to low issues cases.

However, this does not mean that a no to low issues case will be cleared in between 45 to 70 business days after initial submission. Every transaction must be cleared by the authority’s board and the board only meets three times a year. Hence, if the case team submits their report for approval and clearance to the board shortly after the last board meeting was held, there effectively is a 4 months waiting period. Expiration of the statutory review period may also not provide relief.

The statutory review period is 100 days with no option for the authority to extend. However, the authority may stop the clock where they deem necessary. Furthermore, the Competition Law does not specify whether the review period is 100 calendar or business days. To date the authority has not clarified this issue either. Finally, the Competition Law does not address what the effect of the review period lapsing without the authority issuing a decision will be. We are not aware of a case in which the issue has been forced, and the Competition Directorate has not provided guidance.

‍Ad hoc meetings of the board may be convened in urgent cases. However, the Competition Directorate has to date never convened such an ad hoc meeting and has not provided official guidance on what would cause them to do so. Based on prior experience with the authority and unofficial consultations with the authority we understand that an ad hoc board meeting would only be convened, if the Jordanian state has a specific interest in the transaction. Preferences or concerns of the parties do not appear relevant. Also, neither the law nor the authority’s practice suggest that special consideration would be given to transactions concerning targets in financial distress—unless there is a specific interest of Jordan in addressing the financial difficulties of the target.

Hence, waiting for the next board meeting to discuss a transaction notified by delay closing beyond the 100 days’ statutory review period.

Greater enforcement threat

This is particularly concerning since the recent amendments doubled penalties for gun jumping. Fines of between 2 and 10 percent of annual revenue of the violating party may be imposed. The Competition Law does not clarify whether these fines would be calculated based on domestic or worldwide turnover and whether there is in fact a 2 percent minimum fine or whether case may be settled for lower amounts. The Competition Directorate has to date not provided guidance on these matter.

While the authority has not imposed any fines or other sanctions to date, they for the first time established a dedicate investigation department within the Competition Directorate. Also, the authority has shown increased interest in cooperation with other competition authorities in the region. In March 2023, the Competition Directorate for the first time took an active part in the Arab Competition Network during their third annual meeting held in Riyadh. Since than the Competition Directorate held bilateral meetings with several authorities in the MENA-Region including the Egyptian Competition Authority, and the Saudi General Authority for Competition Authority.

Challenges

Consequently, the disruptions a merger control filing in Jordan may cause to deal flow is significant. Waiting for the next board meeting to clear the transaction may cause significant delay. In addition, the uncertainty as to the effect of the statutory review period lapsing without a decision being issued can cause further disruption. Delays and ambiguity will increase deal cost, in particular, where acquirers finance the deal. Furthermore, uncertainty on when a deal can be closed may cause problems in transition planning and disruptions of the targets business. Consequently, some parties may consider taking a view on a Jordanian filing. Still, increased sanctions, uncertainty as to how these will be calculated, enforcement capacity building of the Jordanian authority, and the authority increasingly reaching out to other enforcers make taking a view increasingly risky. This makes Jordan a difficult jurisdiction to manage in a region with several nascent merger control regimes.