SAUDI ARABIA Law and Practice Contributed by: Alex Saleh, Asad Ahmad, Khaled al-Khashab and Shahad Al-Humaidani, GLA & Company
entity does not generally form part of the economic concentration. • Where two or more entities participate in a full-function joint venture together, the rel - evant entities for the notification threshold are all the entities acquiring joint control of the joint venture in addition to 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 prima - ry criterion in determining whether different legal entities form part of a single economic entity is control. If one legal entity controls other legal entities (such as subsidiaries), either directly or indirectly, then for the purposes of determining the total annual sales values of the entity, the relevant single economic entity will include the controlling entity and all of the entities it controls. If a single economic entity consists of two or more legal entities and each of those legal enti - ties prepares accounts, the total sales of the single economic entity for the purposes of cal - culating the notification thresholds are the total combined gross sales revenues of all of the enti - ties. A group will therefore include all companies that have direct or indirect control-based links with the entity concerned, including its subsidi - aries 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 to be sales of the single economic entity. 2.8 Foreign-to-Foreign Transactions The KSA Competition Law applies to all under - takings inside Saudi Arabia. It also applies to undertakings outside Saudi Arabia where those undertakings’ activities, including any economic concentration, may have an effect on a market in Saudi Arabia. Article 3 of the Executive Regula - tions also provides that the GAC may assess the actual or potential effect of the conduct outside Saudi Arabia on a market inside the Kingdom. Nexus Test The GAC will require economic concentrations taking place outside Saudi Arabia to be notified where there is a sufficient nexus between the economic concentration and a market inside Saudi Arabia. Under the KSA Competition Law and the Executive Regulations, this nexus is established where the foreign conduct (including economic concentrations among foreign under - takings) may have an effect on a market inside Saudi Arabia. The GAC will consider that there is sufficient influence on a market in Saudi Arabia where the potential result is direct, substantial and reason - ably foreseeable. The economic concentrations among foreign undertakings are subject to Article 7 of the KSA Competition Law and must, therefore, in gen - eral be notified if the other relevant criteria for required notification are also fulfilled. The GAC will not generally consider there to be sufficient impact on the Saudi Arabian market where the foreign conduct (including economic concentrations) does not meet these criteria. For clarity, a direct effect is not limited to direct sales
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