Saudi Merger Control Regulator Issues Second Conditional Approval

In June 2023 the Saudi Arabian General Authority for Competition (GAC) granted the first conditional approval under the new merger control regime (which came into force in September 2019) for the acquisition of a 51 percent stake in the FinTech business DirectFN (for an overview of this decision see our client update on the decision). The authority now issued its second conditional approval. On 21 August the GAC announced that it cleared the acquisition of 100 percent of the share capital of Faden Media Agency by Arabian Tech Contraction Co. under certain conditions. Regrettably, the GAC—unlike in the DirectFN acquisition—did not disclose what the conditions attached to clearance were.

Both Faden Media Agency and Arabian Tech Contraction Co. operate in the advertising and marketing market. Faden—the target—offers a range of services in Saudi Arabia including digital marketing, social media management, website development, graphic design, video production, event management, and public relations. The acquirer—Arabian Tech—operates outdoor advertising billboards.

The parties notified the proposed acquisition to the GAC. An initial review of the transaction by the GAC showed considerable (potential) overlap between the businesses of the target and the acquirer. This prompted GAC to conduct a market investigation to assess possible impacts on the market for advertising and marketing in Saudi Arabia. Through this investigation the authority found that considering the overlap of the parties’ activities the transactions posed considerable competition risks in the Saudi market. Thus, the GAC decided make clearance subject to certain conditions.

Regrettably, the GAC did not disclose any details on their findings and reasoning for the decision. Furthermore, unlike in the DirectFN case, the GAC also did not disclose what conditions they imposed.

This practice of a public authority not disclosing how they reached their decisions is common in the MENA region. It is rooted in the region’s view on public to private relation as well as a still prevailing conviction that governments and administrative authorities are not under an obligation to make their conduct transparent. We have seen small changes in this regard. However, overall intransparancy remains an obstacle when dealing with public authorities in the region.