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On 21 April 2024, the General Authority for Competition (GAC)
released their first-quarter report for 2024 concerning their
merger control activities. The report indicates that GAC approved
48 transactions unconditionally, issued 32 certificates of
non-notification obligation, and is currently evaluating 13 pending
requests. However, the report did not include any information on
violation proceedings, sanctions imposed, or settlements in
connection with gun jumping and failure to make notifications.
According to the report the number of transactions submitted for
merger review decreased year on year during the first quarter of
2024 compared to the first quarter of 2023 by 8 requests. This
trend is somewhat surprising considering the new notification
thresholds introduced by the GAC in early November 2023 clarified
when notification for merger control review is required. While the
under the new thresholds foreign-to-foreign transactions will still
be subject to a local effects test, this local effects test is
deemed met, where the parties to the transaction have a combined,
annual Saudi turnover exceeding SAR 40 million (approx. USD 10.7
million). Under the old thresholds when the local nexus test was
met, was more ambiguous. A transaction was considered to have a
local effect in Saudi Arabia, if at least one party had a more than
trivial turnover in Saudi Arabia. This left some room for
argumentation of whether a transaction met the local nexus test.
With the introduction of a hard threshold for what would meet the
local nexus test, the GAC largely abolished this ambiguity. Hence,
we would have expected the number of notifications to go up. Still,
the decrease in notification may be due to other factors such as
slow down in M&A activity.
The report did not delve into the specific factors considered by
the authority in evaluating transactions. However, it did present
statistical data on the types of transactions under review.
According to GAC, acquisitions constituted the majority with 71
percent all submissions made during the first quarter, followed by
joint ventures with 21 percent. Distributorship and agency
registrations made up 6 percent, with the remaining 2 percent being
made up by mergers. The report went on to disclose that horizontal
transaction amounted to 50 percent of all filings, 29 percent were
conglomerates, and vertical transactions made up the smallest share
with 21 percent.
The sector from which the largest share of filings was made, was
the industrial sector with 17 filings. The information and
communication sector and the wholesale and retail trade sectors
followed closely with 7 filings each. Divided by geographical scope
foreign-to-foreign transactions were more frequently notified. 62
percent of filings were foreign-to-foreign transactions. Only 38
percent concerned domestic transactions.
While the report offers valuable statistical data on the types
of transactions and sectors with the highest number of filings, it
lacks detailed information on the rationale behind the
authority’s decisions. GAC did not disclose the reasoning for
any of its decisions, merely mentioning the number of unconditional
decisions and non-objection certificates issued. Furthermore, the
GAC again refrained from providing any information on violations,
sanctions imposed, and settlement.
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