The General Authority for Competition ("GAC") supervises the enforcement of the Competition Law and it is Implementing Regulations with the aim to promote and encourage fair competition, prevent illegal controlling practices, guarantee abundance and diversification of goods and services of high quality and competitive prices, and encourage innovation in the Kingdom and support in achieving Vision 2030.
GAC has expressed its intendancy to introduce two new amendments, one will be amending Article 12, sub-paragraph (1) from the Competition Law Implementing Regulations ("Article 12(1)"), whereas the other proposal is to amend the filings fees set out in the GAC board resolution number (320) dated 24th of September 2019 ("Resolution 320"). These amendments are proposed in order to adopt the best measures and to maintain a sustainable and developed market in the Kingdom, being in line with the international standards and best practices. GAC has issued an invitation to the public to participate in a public consultation on the 21st of December 2022 for feedback and comments on the new proposed amendments pertaining to economic concentration financial thresholds reporting, and the GAC merger control application fees. This initiative was channelled through the Public Consultation Platform of the National Competitiveness Centre.
The primary amendment amending Article 12(1) relates to annual sales threshold of SAR 100 Million in which (if triggered), the entities setting up a JV, or carrying our any mergers or would then be required to make official economic concentration filings for GAC's non-objection. The threshold of SAR 100 Million is now proposed to be increased to SAR 200 Million. The proposed amendment of Article 12(1) seems to be a reasonable course initiated by GAC, which possibly was an overwhelming burden on applicants, namely small and medium enterprises who form an important part of the Saudi economy, in addition to the GAC casehandlers who are dealing with a big volume of applications submitted to GAC.
The proposed amendment amending the Resolution 320 relates to the economic concentration filing fees, with the aim to reduce the application examination fees. The latter fees are still set at 0.0002% of the total annual sales of parties participating in an economic concentration filing with GAC, with the cap being reduced to SAR 250,000 as opposed to SAR 400,000. We believe the previous cap had an impact on parties considering setting up JVs, or carrying our any mergers or acquisitions, provided it triggers GAC's filing mandate. With that said, we understand GAC aims to conduct a periodic review of the minimum requirements to report economic concentration requests, taking into consideration the economic and competitive market changes and evolution in the Kingdom to achieve its aim in balancing between reducing the financial burdens of enterprises operating in the market and maintaining the level of fair competition.
We anticipate that the proposed amendments will have a positive impact on the Kingdom's economy, by doing business in the Kingdom, attracting further JV, mergers and acquisitions, and will also amongst others, create job opportunities supporting the national workforce in the Kingdom. In addition, GAC is aiming to introduce further amendments to the Competition Law in due course.
Written by Abdulrahman Al-Ohaly and Noura Mardini