On 28 September 2023, a new federal law regulating competition, Law No. 36 of 2023 (the “New Competition Law”), was issued, repealing Law No. 4 of 2012 (the “Old Competition Law”). The New Competition Law introduces significant amendments to the UAE competition regime and came into effect on 28 December 2023.
One of the major areas of improvement under the New Competition Law is the merger control regime. Under the updated regulations, prior approval from the Ministry of Economy (“Ministry”) is required for any proposed economic concentration that may affect competition in a relevant market, particularly if it creates or enhances a dominant position. Additionally, the law extends the notification period for economic concentration processes to 90 days, instead of 30 days, before finalizing the relevant agreements.
The threshold for assessing the impact of economic concentration will be determined based on two key factors:
- Annual turnover of the establishments involved.
- Market share within the relevant market, as defined by the Cabinet.
On 20 January 2025, the UAE Cabinet issued Decree No. (3) of 2025, confirming the new merger control filing thresholds, which will take effect on 31 March 2025. This decree replaces Cabinet Decree No. (13) of 2016, which governed the thresholds under the Old Competition Law.
According to the New Decree, starting from 31 March 2025, an economic concentration must be notified to the Ministry for review at least 90 days before completion if either of the following conditions is met:
- The parties’ combined sales in the relevant market within the UAE during the last fiscal year exceeded AED 300 million; or
- The parties have a combined market share exceeding 40% of total sales in the relevant market in the UAE during the last fiscal year.
This updated threshold aligns with elements of the previous UAE merger control regime under Decree No. (13) of 2016 but introduces more stringent requirements.
Failure to notify a transaction that meets either of the above thresholds can result in significant penalties. Violating parties may face fines ranging between:
- 2% and 10% of their annual revenue derived from the sale of the relevant goods or services in the UAE.
- If the UAE revenue from the relevant goods or services cannot be determined, a fine between AED 500,000 and AED 5 million will be imposed.
These stricter enforcement measures emphasize the importance of compliance with the new merger control requirements to avoid regulatory penalties.
Our Principal Partner Mohamed El Khatib, Counsel Dr. Kamel Elshendidy, and Associate Mostafa Dawoud break down what this means for your business.
Need tailored advice? Book a consultation with Mohamed El Khatib today.
