UAE Introduces New Merger Control Regime: Key Changes and Implications for Businesses

???? Resolution No. (3) of the UAE Cabinet for 2025 outlines new merger control regimes, effective from 31 December 2018. March 2025. A turnover-based test has been introduced as part of this resolution's clear thresholds for merger control filings, which are yet to be determined. ?

Key Highlights:

1-????? Background: A new Competition Law has been implemented in the UAE by the Federal Decree-Law No. 36. In December 2023, the UAE will undergo a more extensive regulatory change. It applies to all businesses, including individuals, head offices, branches, and entities that have an impact on local competition within or outside the UAE. Despite the delay in the publication of the Implementing Regulations, the new resolution provides some clarity on merger control rules.

2-????? Updated Merger Control Rules: If the combined annual turnover of the parties involved in the UAE is over AED 300 million (USD 81.7 million), they must inform the Dubai Ministry of Economy (MoE) under the new Turnover Threshold.

-????????? Market Share Limit: The notification must be given if the parties involved in the merger have a combined market share of more than 40% in the UAE.

-????????? Definition of Economic Concentration: This refers to the merger, acquisition, or joint venture where one party exercises control over the other. Nonetheless, specifics regarding joint ventures and minority shareholdings require clarification. Why? It is mandatory for companies meeting these thresholds to file the transaction with the MoE within 90 days of completion, previously 30 days.?

3-????? Dominance and Sectorial Exemptions: The market share benchmark for dominance, which was once established by the competition law, is still 40%. While sector-specific exemptions are no longer applicable under the new law, existing regulations on competition in certain industries may still be subject to exemption. More information will be provided in the forthcoming Implementing Regulations.

4-????? Penalties and Compliance: More stringent punishments for notifying about potentially fraudulent transactions:

-????????? Fines in the UAE can be anywhere between 2% and 10% of annual revenues from the relevant product/service.

-????????? Fines for anti-competitive conduct may begin at AED 100,000, with a maximum penalty of 10% per sale or AED 5 million if revenues cannot be determined.?

5-????? Implications for Businesses: Businesses may need to consider the 90-day notification period before closing deals, as these M&A transactions may require longer approval times. Companies need to conduct proactive checks on compliance to avoid penalties. Why?... MoE wants to simplify the process of approvals so that it is not detrimental to competition and does not harm the economy.

Looking Ahead

???? Although the UAE's framework for controlling mergers has been more clearly established, the Implementing Regulations are expected to provide further details in the next few months.

???? Businesses must remain cognizant of the new compliance landscape to ensure expeditious transaction approvals. To ensure effective compliance planning, it is essential to prioritize the early stages of preparing for mergers, acquisitions, or joint ventures in the UAE.