BAHRAIN Law and Practice Contributed by: Rad El Treki, Noor Al Rayes, Aayush Kainya and Mohamed Al Sari, Al Tamimi & Co.
2.4 Relationship Between Regimes Extraterritoriality in Merger Control
Sector-Specific Impacts The effective extraterritorial application is most aggressive in the financial services and telecommu - nications sectors. The CBB requires prior approval for any acquisition of a qualified participation (10% or more) in a licensed financial institution. This applies regardless of whether the transaction happens at the level of the local bank or at the level of its foreign par - ent. Similarly, the TRA maintains a veto over changes in control of international groups that hold Bahraini licenses, viewing offshore transactions as potentially impacting the Kingdom’s critical digital infrastructure and national security. 3. Merger Control – Jurisdiction and Filing 3.1 Transactions Subject to Merger Control Under the Competition Law, any transaction that results in a change of control (whether direct or indi - rect) falls within the scope of the regulator, provided it meets the market share or turnover thresholds. The regime captures a wide array of transaction types, which are broadly categorised as follows. Share and Asset Deals Share deals refers to any transfer of stocks or equity that allows the acquirer to exercise decisive influence over the target’s strategic decisions (such as appoint - ing the board or approving the budget). Regarding asset deals, the regime specifically includes the transfer of assets, rights or obligations. This means that buying a competitor’s business divi - sion, customer list or even intellectual property rights can constitute an economic concentration if those assets enable the buyer to exercise market control. Full-Function Joint Ventures The creation of a joint venture is subject to merger control if it performs all the functions of an autono - mous economic entity on a lasting basis. For a joint venture to be notifiable, it must have its own man - agement and sufficient resources (staff, assets and finance) to operate independently in the market. If a joint venture is merely a vehicle for a specific project or lacks its own independent presence, it may still be
The primary instrument for merger control, Law No 31 of 2018 (the “Competition Law”), explicitly adopts the effects doctrine. According to Article 2, the provisions of the law apply to any conduct or arrangement that is intended to, or results in, the prevention, restriction or distortion of competition within Bahrain. This applies even if the parties involved are not established in the Kingdom or if the economic activities are carried out abroad. In practice, if two international entities with no physi - cal presence in Bahrain merge, but their combined sales into the Bahraini market exceed the market share thresholds (40% for a single dominant posi - tion or 60% for a collective one), the CPA asserts the right to review the deal. Over the past year, the CPA has become more diligent in monitoring global “mega-mergers” in sectors like pharmaceuticals and digital services, where offshore consolidation directly impacts the choice and pricing available to Bahraini consumers. FDI and National Security Nexus The FDI and national security regime, managed through the Sijilat system and overseen by the MOI, typically requires a local nexus, such as a Bahraini subsidiary or a commercial licence, to trigger a formal filing. However, the scope of what constitutes a “local interest” has expanded. Under Decree-Law No 38 of 2025, the focus has shifted towards the ultimate ben - eficial owner (UBO) and shadow managers. If a foreign-to-foreign transaction results in a change of control at the top of a global parent company, and that parent company owns a strategic asset in Bah - rain (such as a telecommunications stake or a port operation), the change must be reflected in the local commercial registry. This indirect change of control triggers a mandatory security re-screening of the new global owners. Failure to notify the MOIC of such an offshore shift can lead to the suspension of the local entity’s commercial licence or substantial administra - tive fines.
13 CHAMBERS.COM
Powered by FlippingBook