SAUDI ARABIA Law and Practice Contributed by: Alex Saleh, Asad Ahmad, Omar Halbouni and Shahad Al-Humaidani, GLA & Company
cle and motorcycle repair) and then professional, sci - entific and technical activities. The remaining filings spanned a wide range of other sectors, indicating a relatively diversified pipeline of transactions beyond the leading categories. In terms of economic concentration-related violations, the GAC has imposed its first fine since October 2020. The fine was imposed on an entity for failing to notify an economic concentration in 2024. This is the sec - ond time this type of fine has been imposed since the Competition Law was implemented. The fine was issued against Panda Retail Company and Atabat Al- Bab Telecom and Information Technology Company, according to the GAC. The GAC, in a media statement circulated by the head of the GAC’s M&A Department, Talal Al Hogail, stated that it undertook investigative efforts following a deci - sion by the GAC board of directors. They revealed that the parties to the transaction had indeed engaged in a notifiable economic concentration and concluded its implementation without notifying the GAC, in viola - tion of Article 7 of the KSA Competition Law. Upon finding that the parties were in violation of the KSA Competition Law, the GAC imposed a financial fine of SAR400,000 on each party. This sanction is in line with the penalties prescribed under Article 19 of the KSA Competition Law for failure to notify an economic concentration. 2.3 Types of Transactions The KSA Competition Law uses the economic con - centration principle to identify merger control issues. Economic concentration is defined as any action that results in a total or partial transfer of ownership of assets, rights, equity, stocks, shares or liabilities of a firm to another by way of merger, acquisition, takeo - ver or the joining of two or more managements in a joint management or in any other form that leads to the control of an entity, including influencing its deci - sion, the organisation of its administrative structure or its voting system. This definition captures asset and share purchases, joint ventures, mergers and takeo - vers. In terms of exceptions, the Guidelines:
• confirm that if a transaction does not lead to a change of control over the target entity, no GAC filing will be required; and • confirm that public institutions and state-owned companies, if they are solely authorised by the government to supply goods or services in a par - ticular field, will not have to make a filing. 2.4 Definition of “Control” While before the issuance of the Guidelines it remained unclear how the GAC would analyse the elements of control, the Guidelines now clarify this by defining control as “the ability to exercise decisive influence over the strategic or operational decisions of the tar - get entity”. This includes the appointment of senior management and approval of budgets, business plans and major investments. It is now clear that transactions that do not result in a change of control (eg, acquisition of minority inter - ests with no veto rights over strategic decisions or internal restructuring within the same corporate group) are outside the scope of the economic concentration notification requirement and notice to the GAC is not required. 2.5 Jurisdictional Thresholds Article 7 of the KSA Competition Law states that enti - ties involved in an economic concentration must notify the GAC of the concentration if the total annual sales of the entities seeking to participate in the economic concentration exceed the amount determined by the Implementing Regulations. Article 12 (1) of the Implementing Regulations requires that an economic concentration be notified to the GAC if the total annual sales value of all entities intending to participate in the economic concentra - tion exceeds SAR200 million. This requirement was established in line with the GAC’s approved decision dated 23/08/1444H, corresponding to 15 March 2023, which increased the threshold from SAR100 million to SAR200 million. In addition, the GAC board of directors, at its meet - ing No. 84 dated 23 October 2023, announced new requirements for an economic concentration’s eligi -
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