SAUDI ARABIA Law and Practice Contributed by: Alex Saleh, Asad Ahmad, Omar Halbouni and Shahad Al-Humaidani, GLA & Company
Lastly, the KSA Competition Law does not distinguish between sales that occur within Saudi Arabia and those that occur outside the country. The GAC will therefore consider the relevant annual sales figures to be the combined aggregate group-wide and world - wide sales figures of all the relevant entities. Currency If the entity’s financial statements are presented in a currency other than Saudi Arabian riyals, the annual gross revenues should be converted to Saudi Arabian riyals using the average foreign exchange rate quoted by the Saudi Arabian Central Bank for the relevant financial year. 2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds Please see 2.8 Foreign-to-Foreign Transactions . The KSA Competition Law specifies “all the entities participating in the concentration” and does not dis - tinguish between acquiring and selling an entity or between mergers and acquisitions. The KSA Com - petition Law, therefore, requires that the notification threshold take into account the total sales of all enti - ties participating in the concentration, without distinc - tion or exclusion. The GAC considers that the entities “participating” in the concentration are all those that form part of the newly concentrated entity after the economic concen - tration transaction has been completed. • Where two or more entities merge, the relevant entities are the merging entities in their entirety. • Where one entity acquires another, the relevant concentrated entities are the acquiring and acquired entities, but not the selling entity. • Where one entity acquires a part of another entity’s operations, for example, through purchasing a sub - sidiary or operational division, the relevant entities are: (a) the entire entity which is acquiring the opera - tions or division; and (b) the operations or division it is acquiring, but not the entity which is selling the operations or division. This is because the acquiring entity
and the target operations or division generally form part of (and are therefore participating in) the economic concentration, but the sell - ing entity does not generally form part of the economic concentration. • Where two or more entities participate in a full- function joint venture, the relevant entities for the notification threshold are all entities that acquire joint control of the joint venture, as well as the joint venture itself. This principle applies to newly formed joint ventures and to the acquisition of joint control of pre-existing entities. Company Groups Two or more legal entities will be considered to form part of the same economic entity if they constitute a “single economic entity”. The primary criterion in determining whether different legal entities form part of a single economic entity is control. If one legal enti - ty controls other legal entities (such as subsidiaries), either directly or indirectly, then, for the purposes of determining the total annual sales value of the entity, the relevant single economic entity will include the controlling entity and all entities it controls. If a single economic entity comprises two or more legal entities and each of those legal entities prepares accounts, the total sales of the single economic entity for the purposes of calculating the notification thresh - olds are the combined gross sales revenue of all the entities. A group will therefore include all companies that have direct or indirect control-based links with the entity concerned, including its subsidiaries, but also including its parent company or companies and any other companies within the parent company’s group. Exception The single economic entity’s revenues will exclude revenues resulting from transactions between the different legal entities within the group. These intra- group transactions are not considered sales of a sin - gle economic entity. 2.8 Foreign-to-Foreign Transactions The KSA Competition Law applies to all undertakings inside Saudi Arabia. It also applies to undertakings outside Saudi Arabia whose activities, including any economic concentration, may affect a market in Sau -
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