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Content last updated: 20-03-2020

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  • Merger Screening

1. What type of transactions are caught by the merger control regime?

1.1 Concentrations

1.1.1 Type of transactions that are caught by the merger control rules?

The Saudi merger control regime applies to “economic concentrations”. The definition is broad and covers almost every type of transaction resulting in a concentration.

An economic concentration is created by full or partial transfer of ownership (including beneficial ownership) of an entity’s assets, rights, shares, interests or obligations to another entity operating in the Saudi market, whereby the acquirer obtains “dominance by way of merger, takeover, acquisition, or by way of combination of two or more managements into one joint management or any other means that lead to a state of economic concentration”.

2. Establishing jurisdiction for notification of mergers

2.3 General thresholds

2.3.1 Threshold(s) for when a concentration must be notified under the general merger control regime?

Merger filing is needed if the combined global turnover of the undertakings concerned exceeded SAR 100,000,000 in the last financial year.

As laws on merger control in Saudi Arabia are relatively new, there is little or no precedent to guide definitions.

The law does not state whether turnover should be calculated on a global or domestic level but is interpreted to refer to global turnover.

2.4 Other national thresholds for ex ante merger control (e.g. sector-specific rules)

2.4.1 Relevant thresholds for sector-specific or other ex ante merger control rules?

There are restrictions on investment in certain sectors:

  • oil exploration, drilling and production;
  • security and detective services;
  • manufacturing of military equipment;
  • catering to military personnel;
  • manufacturing of civilian explosives;
  • tourist guidance services relating to Hajj and Umrah;
  • commission agents;
  • real estate investment in certain regions;
  • printing and publishing (subject to a number of exceptions);
  • services provided by midwives, nurses, physical therapy services and certain quasi-doctoral services;
  • fisheries; and
  • poison centres, blood banks and quarantine.

In addition, the Saudi Arabian General Investment Authority (SAGIA) requires minimum Saudi participation in entities that operate within certain sectors, such as retail and wholesale trade, where a minimum of 25 per cent Saudi participation is required). The SAGIA issued a statement in September 2015 saying that it would permit 100% foreign ownership of entities engaged in retail and wholesale trade, but this has yet to be implemented.

For other sectors, non-Gulf Cooperation Council (GCC) countries (i.e. Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates) must apply for and obtain a foreign investment licence from the SAGIA.

2.5 Foreign-to-foreign mergers

2.5.1 Do any exemptions, special thresholds etc. apply to foreign-to-foreign mergers, i.e. where none of the undertakings concerned is domiciled in the jurisdiction?

See Section 2.4.1 above.

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