Merger Control in the UAE: Key Changes Under the New Competition Framework

The much-anticipated executive regulations for Federal Decree-Law No. 37 of 2023 on the Regulation of Competition (2023 Law), issued under Cabinet Resolution No. 3 of 2025 (2025 Resolution) have now been released, establishing the exact thresholds that trigger a merger control notification. With the 2025 Resolution set to become effective by end of March 2025, businesses now have a more precise framework enabling them to assess with further certainty whether their transactions require regulatory approval.

In alignment with the UAE's commitment to enhance market transparency and foster a more competitive economic landscape, the UAE's competition law framework had seen a pivotal transformation with the enactment of the 2023 Law which replaced Federal Law No. 4 of 2012 (2012 Law). A key area of reform related to the merger control regime where the 2023 Law introduced refined thresholds with the specifics having been left to be determined in the 2025 Resolution.

Pending the issuance of the 2025 Resolution, the Department of Competition within the UAE Ministry of Economy, being the authority responsible for reviewing merger control applications, continued to apply the thresholds established under Cabinet Decision No. 37/2014 (2014 Executive Regulations) and Cabinet Decision No. 13 of 2016 Concerning the Ratios and Controls Related to the Application of Federal Law No. 4 of 2012 Regulating Competition (2016 Executive Regulations) which have now been repealed.

With the 2025 Resolution now in place, the newly defined thresholds will take effect, offering companies greater clarity in navigating the competition framework and ensuring compliance with local legislation.

 

Scope of Applicability

The 2023 Law applies to economic activities carried out both inside and outside the UAE, including activities that are conducted outside the UAE, which impact competition within the UAE. The 2023 Law expands the scope of the Relevant Market's definition beyond physical products and spaces to also include digital products and markets.

 

Merger Control Key Criteria

The 2012 Law focused on economic concentration, defined as any activity resulting in a change of ownership or control of assets, rights, shares or obligations between organizations which could impact market competition. Economic concentration is assessed based on dominant position, in turn defined as a position which enables an entity (solely or collectively with other entities) to control or affect an activity on the Relevant Market (as defined in the relevant legislation). Under the 2012 Law, a transaction required regulatory approval if it resulted in a company achieving a dominant position in the Relevant Market, with the specific ratios and criteria being set out in the 2016 Executive Regulations.

Under the 2016 Executive Regulations, the market share is determined based on the total sales revenue of the relevant entities within the Relevant Market, measured against the overall market revenue, with a 40% market share indicating a dominant position and triggering a merger control notification. The said statutory 40% benchmark, and the absence of a clear turnover threshold, allowed certain transactions involving companies with high revenues but a lower market share to potentially fall outside of the scope of the regime.

The 2023 Law addressed this perceived enforcement gapt by establishing an additional filing threshold based on annual turnover and is supplemented by the 2025 Resolution which determined the exact figures for the relevant thresholds. Under the 2023 Law and the 2025 Resolution, a merger notification is required, prior to completing a transaction, where relevant entities meet either of the below thresholds:

1. Annual turnover i.e., the total annual sales of the parties in the Relevant Market during the previous fiscal year exceeds AED300,000,000; or
2. Market share i.e., the total share of the parties exceeds 40% of the total transactions in the Relevant Market during the previous fiscal year.

 

Exemptions

Under the 2012 Law, certain sectors such as oil and gas, pharmaceuticals, financial services, telecommunications, etc. were exempt from the law's application.

The 2023 Law takes a different approach by removing the sectoral exemptions. Entities owned by the government (identified by either cabinet decision or by local government) are exempt from the merger control filing. Agreements and contracts relating to specific goods or services that are regulated by another law are also exempt from the application of the 2023 Law, provided that the other governing law oversees the competition matters within the relevant sector.

 

Timeline

The 2023 Law requires the concerned businesses to file merger control notifications with the Ministry of Economy at least 90 days prior to the completion of the transaction. Following the Ministry of Economy confirming receipt of the merger control application, the Ministry will have 90 days (potentially extendable by 45 days) to issue its decision on the transaction. If the Ministry does not render a decision within this timeframe, the application will be deemed rejected (with a possibility to appeal the Ministry's decision within 30 days from receiving its decision). This implicit rejection marks an important shift from the 2012 Law whereby the Ministry's lack of response was interpreted as approval.

 

Fines

Parties failing to make the required filings where their transaction triggers a merger control notification may be liable to a fine commencing at AED100,000 and not exceeding 10% of the total annual revenues made in the UAE during the previous fiscal year. If the revenue cannot be determined during that fiscal year, then the fine could range from AED500,000 to AED5,000,000.

 

Conclusion

The establishment of the market share and turnover-based thresholds has provided greater clarity on merger control requirements and the 2025 Resolution has brought much-needed clarity in this respect. It is crucial for businesses to determine potential risks and factor in merger control requirements in their transactions to align with the local regulations moving forward. However, the clearance timeline and the deemed rejection in case no decision is issued, can result in deal timetable and deal uncertainty issues, which diverges from many other international regimes.