KUWAIT Law and Practice Contributed by: Sam Habbas, Luis Cunha, Hisham Al-Quraan and Mustafa Sayed, ASAR – Al Ruwayeh & Partners
ket. Also of significance is the fact that, while the previous and now repealed Competition Law (No 10 of 2007) provided that control would be established where a person (or group of per - sons), directly or indirectly, controls 35% or more of a particular market, this has not been carried over into the current Competition Law or its implementing regulations. However, Article 12 of the Competition Law does provide that such reporting obligations would be triggered where the value of the underlying registered assets or annual sales in Kuwait subject to the economic concentration exceeds certain thresholds. These thresholds are set out in CPA Resolution No 26 of 2021 on Controls of Aggregate and Individual Thresholds. The reporting thresholds have been set rather low, giving rise to a significant added reporting/approval regulatory burden in relation to M&A activity in Kuwait. Given the novelty of the Competition Law (and its implementing regulations), there is a lack of precedent and guidance from the authorities on how economic concentration and control over a market would be applied in practice. The issues involved are amplified when the transac - tion involves a sale abroad with only a limited impact in Kuwait – the authorities have thus far failed to clarify the level of impact required. While the CPA has not rigorously implemented requirements under the competition laws in the past, it has recently begun taking a more active approach in applying the requirements under the Competition Law. 6.2 Merger Control Procedure As indicated in 6.1 Merger Control Notification , the Competition Law provides that the partici - pants of an economic concentration situation are required to obtain the approval of the CPA before completing such economic concentra - tion. A CPA application is required only if the rel -
evant registered assets or annual sales in Kuwait exceed the applicable thresholds. The application to be submitted to the CPA should include confirmation of the payment of an administration fee in an amount equal to 0.1% of the paid capital or the aggregate value of the assets of the relevant persons in Kuwait, whichever is less, subject to a maximum of KWD100,000. The CPA should then examine the application to determine the possible negative consequences of the economic concentration on free competition. Given the timelines afforded to the CPA in evaluating such application, this process may take several months to complete, but currently, in practice, this would take two months. 6.3 Cartels The Competition Law guarantees the freedom of exercising economic activity in a manner that does not affect free competition for all in Kuwait. The Competition Law also contains a general prohibition on acting in an anti-competitive man - ner (by stating that all agreements, practices, etc, that are harmful to free competition are prohibited) and elaborates on particular agree - ments/practices that are restricted. The Com - petition Law provides that it shall apply to all acts perpetrated abroad that affect competition in Kuwait. The Competition Law has introduced the con - cepts of horizontal relationships and vertical relationships into Kuwaiti law. Persons are in a horizontal relationship when they are on the same level of production/dis - tribution level in a particular market, whereas a vertical relationship exists when they are on dif - ferent levels of a production or distribution chain of a particular market.
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