On July 1, 2024, Saudi Arabia’s General Authority for Competition (GAC) released a new, fifth edition of its Merger Control Guidelines—an important update that businesses, investors, and legal advisors should carefully review. The revised Guidelines modernize and clarify several aspects of the Kingdom’s merger control regime, with notable changes to notification thresholds, definitions of control, exemptions for certain joint ventures, and the validity of clearance decisions.
While much of the structure remains familiar, these updates reflect GAC’s intent to target transactions with genuine local impact, reduce unnecessary filings, and align more closely with international standards.
Updated Notification Thresholds: More Targeted, Still Broad
One of the most significant changes lies in the merger notification thresholds—particularly for acquisitions.
Previously, a foreign acquirer with significant Saudi turnover could be required to file a merger notification even if the target had no business activity in Saudi Arabia. This was seen by many as overly broad and burdensome. The new Guidelines correct this by introducing a local nexus requirement for the target in acquisition scenarios.
Under the updated framework, an acquisition now requires notification if:
- The parties collectively have global turnover exceeding SAR 200 million (~USD 53 million);
- They have Saudi turnover exceeding SAR 40 million (~USD 10.6 million), and the target has some Saudi turnover; and
- The target has worldwide turnover exceeding SAR 40 million (~USD 10.6 million).
That said, the Guidelines stop short of defining a minimum threshold for the target’s Saudi turnover. This leaves room for interpretation. GAC has indicated that the requirement is intended to ensure a local connection, but without clarifying whether de minimis or one-off sales by the target to Saudi Arabia would trigger a filing. Until further guidance is issued, businesses will need to monitor how GAC applies this requirement in practice.
Importantly, there is no requirement for product or market overlap for a filing to be triggered. GAC considers combined turnover across any market, so long as the financial thresholds are met.
Mergers and Joint Ventures: Still Captured, Even Without Saudi Activity
In contrast to acquisitions, mergers and joint ventures are still not exempt from filing obligations merely because the target or JV lacks Saudi turnover.
For mergers or joint ventures to be notifiable, the following conditions must be met:
- Combined global turnover of the parties exceeds SAR 200 million (~USD 53 million);
- Combined Saudi turnover exceeds SAR 40 million (~USD 10.6 million); and
- At least two parties (not necessarily including the JV or target) each have global turnover exceeding SAR 40 million (~USD 10.6 million).
Under this rule, greenfield joint ventures still trigger a filing obligation if the parent companies meet the financial thresholds. This preserves the GAC’s broad jurisdiction over deals that may influence competition in the Kingdom, even indirectly.
The Guidelines also note that below-threshold transactions may still be notifiable if they have a "local effect" in Saudi Arabia. This could include:
- Transactions involving geographic markets outside the Kingdom that are closely connected to Saudi Arabia
- Global deals with spillover effects on competition in Saudi markets
- Any deal that could otherwise affect competitive conditions locally
This catch-all clause gives GAC continued flexibility to intervene in strategic deals with regional or global implications for the Kingdom.
A Clearer Definition of "Control"
Another key update involves the concept of “change of control.” Previous Guidelines offered only a basic definition. The new version significantly expands this section to clarify when a change of control occurs and what constitutes actual control—both positive (active) and negative (blocking).
Control is now defined as the ability to impose or block decisions related to an undertaking’s strategic or commercial operations. A change of control occurs when:
- A person or entity gains either positive or negative control where they previously had none; or
- A person moves from having negative control to positive control; or
- There is a change from joint to sole control, or vice versa.
The Guidelines offer examples of rights that typically indicate control:
- Approval or veto powers over strategic business decisions, budgets, business plans, or appointment/removal of key executives;
- Influence over investment decisions, depending on their scope;
- Joint control arrangements, even where minority shareholders share influence.
By contrast, veto rights limited to fundamental corporate changes (like amending the company’s articles or dissolving the business) do not normally confer control.
The Guidelines also clarify that control may arise through other forms of influence, including:
- Agreements among shareholders to act in concert;
- Long-term management, licensing, or franchise agreements;
- De facto control due to economic dependency, financial links, or even personal ties.
Exemptions: A Nod to Local Manufacturing
The new Guidelines introduce a specific exemption for joint ventures aimed at expanding Saudi Arabia’s manufacturing sector.
A JV is exempt from merger notification if:
- It manufactures products in the Kingdom that are not currently produced, or are only produced and sold in limited regions of Saudi Arabia; and
- There is no competitive overlap between the JV and its parent companies.
This exemption promotes foreign-Saudi collaboration in industrial development, a key goal under Saudi Arabia’s Vision 2030. However, it is narrowly drawn, applying only in limited scenarios.
A pre-existing exemption for companies in financial distress remains in effect.
Clearance Validity and Refiling
Once the GAC approves a transaction, that clearance is now valid for one year. If the parties fail to complete the deal within that time, they must resubmit the notification and wait for renewed approval before proceeding.
This change helps ensure that clearances are based on up-to-date competitive conditions and deal terms. However, it also adds an element of urgency to getting deals done within the approval window.
Final Thoughts: Progress with Room to Grow
The 2024 GAC Merger Guidelines represent a thoughtful evolution of Saudi Arabia’s competition regime. Several steps—like the introduction of a target nexus for acquisitions, the refined definition of control, and clear exemptions for industrial joint ventures—move the framework closer to international best practices.
Still, the Guidelines fall short in a few areas. For instance:
- There’s no formal expedited review process for straightforward, no-issue transactions.
- The lack of defined thresholds for target turnover in acquisition filings could create uncertainty.
- The rules continue to capture some transactions with limited local relevance, especially greenfield JVs.
Nevertheless, the GAC’s direction is clear: enhancing regulatory certainty while supporting economic growth and competition. Businesses considering transactions involving Saudi Arabia should pay close attention to these changes—and seek legal guidance to ensure compliance under the new rules.
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