GILS Antitrust law: UAE
UAE
1. Is the mandatory merger control regime in force in UAE?
Yes when consolidation would result in economic concentration, by holding or creating a dominant position.
2. Which authority is responsible for the merger control regime in UAE?
The Ministry of Economy is the relevant controlling authoring for Mergers, that would result in economic concentration, by creating a dominant position.
For businesses that do not have a dominant position, the merging entities need to seek approval from the local registration authority where the entities are registered. For example, if two merging companies are registered in Dubai, they need to seek clearance from the Dubai Economic Department, being the licensing authority in charge of commercial companies’ registration.
Notwithstanding the foregoing, if the merging entities carry out regulated activities (for example, banking, finance, insurance…etc.) then they need to secure approval from the respective regulatory authority in addition to the approval of the commercial companies’ registration authority.
For banks, finance and insurance companies, approval to merge is required from the Central Bank of the UAE.
For companies licensed to advise on, promote, hold, manage and broker securities and commodities, including publicly listed companies, approval to merge is required from the Emirates Securities and Commodities Authority.
For private joint stock companies, an approval to merge is required from the Ministry of Economy.
There may be other authorities in charge of approving the merger of other companies or firms that are licensed to carry out specific regulated business such as oil and gas, medical, legal…etc.
3. What is the definition of concentration?
Pursuant to the UAE Federal Decree Law number 36 of 2023, Economic Concentration is defined as “Any action that leads to the full or partial transfer (merger or acquisition) of ownership or usufruct rights in properties, rights, stocks, shares, or obligations of an entity to another. This action grants an entity or a group of entities direct or indirect control over another entity or a group of entities.”
4. Is pre-merger filing or post-merger filing required?
Pre-filing is required for clearing Economic Concentration.
5. Examples of key concentration types caught by merger control rules in UAE.
We are not aware of published examples.
6. What are the notification thresholds, which a concentration must trigger for a merger control filing to be required?
There is no fixed threshold that requires notification; however notification is required to complete a transaction that would result in Economic Concentration due to a Dominant Position.
The UAE Federal Decree Law number 36 of 2023 defines “Dominant Position” as “an entity is dominant if it possesses, either independently or in collaboration with other entities, the ability to control and affect the activity of a Relevant Market.”
“Relevant Market” is defined in the same Decree as “The market that is based on two elements:
- Concerned Products: The product or service or all products or services which are, in view of their price, characteristics and uses, interchangeable to meet a particular need of the consumer.
- Specific Geographical Location: the physical or digital place where supply and demand converge for a product or service and where competition conditions are similar or homogeneous”.
7. Does the authority have any discretion to review transactions that do not meet the notification thresholds?
Yes, the Ministry of Economy has the power and discretion to assess transactions irrespective whether they meet the notification threshold, in respect of mergers and consolidation that may result in Economic Concentration.
8. Do the merger control rules apply to foreign-to-foreign transactions taking place outside UAE?
The merger control in respect of Economic Concentration applies to any entity, in relation to its activities inside the UAE, or outside the UAE where such international practice has an impact inside the UAE.
9. Are there specific merger control rules relating to the notification thresholds (e.g., specific merger control notification thresholds for specific sectors; different rules to calculate turnover for specific industry sectors such as banks and insurances or retail, specific rules relating to foreign subsidies, companies, etc.)?
N/A
10. Whether UAE requires the payment of filing fees and if yes, when?
Details of filing procedures including the associated fees are expected to be set in the new Bylaws to be issued as implementation to the UAE Federal Decree Law number 36 of 2023.
11. Whether there is a filing deadline in UAE requiring a notification to be filed within a certain period of time following a particular transactional event (e.g., signing a share and purchase agreement)?
The filing deadline is 90 days.
12. What information and documents must be disclosed or provided to the authority for the purposes of merger clearance?
Details of filing procedures including the associated fees are expected to be set in the new Bylaws to be issued as implementation to the UAE Federal Decree Law number 36 of 2023.
We expect the applicant to submit data on expected gross sale number and market shares prior to consolidation and forecast numbers post merger/consolidation.
13. What are the time periods within which the authority must reach a decision on the merger clearance? Is any fast track or simplified procedures available?
90 days but can be extended for another 45 days.
14. What are the penalties which the authorities may impose for "failure to file" or "late notification"?
A fine of no less than 2% and no more than 10% of the annual total sales of goods or services revenues subject of the violation, which the violating entity has achieved within the UAE during the last fiscal year. If it is not possible to determine the annual total sales or revenues achieved, the penalties shall be a fine of no less than AED 500 000 and no more than AED 5 million.
15. Have there been any recent developments regarding the merger control regime in UAE?
N/A
Author: Issam Dahman
