New UAE Merger Control Thresholds Now Effective

This LawFlash sets out the key features of the new UAE merger control regime, which recently came into effect.

In December 2023, the United Arab Emirates introduced a new competition law [1] (Competition Law), implementing a turnover-based threshold alongside the existing market-share threshold. On 20 January 2025, the UAE government issued a ministerial decree [2] (Decree) stipulating the threshold amounts for obtaining prior approval under the new merger control regime in the UAE. The Decree came into effect on 31 March 2025.

TRANSACTIONS CAUGHT UNDER THE NEW REGIME

Article 1 of the Competition Law defines an economic concentration as any action that leads to the full or partial transfer (merger or acquisition) of ownership or usage rights in properties, rights, stocks, shares, or obligations of an entity, and which results in the "direct or indirect control" over another company. The scope of the transactions covered under the Competition Law is therefore very broad.

Regarding joint ventures, the Competition Law potentially encompasses a wide range of joint ventures, given its broad scope. However, it remains unclear whether greenfield joint ventures and non-full-functional joint ventures are covered under the Competition Law. A conservative interpretation would suggest that any joint venture meeting the applicability conditions set out in further detail below may be covered. However, the upcoming implementing regulations may provide greater clarity on this point.

Similarly, it remains to be seen how acquisitions of minority shareholdings will be treated under the forthcoming implementing regulations. It stems from previous practice that the acquisition of a minority stake, when combined with certain relevant control rights in an entity, may result in a change of control.

With respect to foreign-to-foreign transactions, the Competition Law applies to transactions and economic activities outside the UAE that may affect competition in the UAE. [3] Therefore, any transaction that meets the relevant thresholds potentially triggers a merger notification requirement in the UAE.

THRESHOLDS

Under the general rule of Article 12 of the Competition Law, an application is required for economic concentration operations that have a potential to impact the level of competition within the relevant market, and in particular to create or reinforce a dominant position, provided that a filing threshold is met.

Article 2 of the Decree specifies that a dominant position occurs when the share of one party, taken alone or together with other parties, exceeds 40% of the total transactions in the relevant market.

Article 3 of the Decree provides that an economic concentration must be notified to the UAE Ministry of Economy (MOE) if it meets either of the following thresholds:

• Turnover Threshold: Where the total annual sales of the parties in the relevant market in the UAE exceeds AED 300 million during the latest fiscal year (approximately $81.6 million)
• Market Share Threshold: Where the total market share of the parties exceeds 40% of the total sales in the relevant market in the UAE during the last fiscal year.

In accordance with Article 1 of the Competition Law, the “relevant market” is defined on the basis of the following two elements (consistently with practice in the EU and other merger filing regimes around the world):

• The "Relevant Product Market," which is comprised of products or services that, by virtue of their price, characteristics, and intended use, are considered interchangeable to meet a particular need of the consumer
• The "Relevant Geographic Market," which constitutes the physical or digital place where supply and demand for products or services converge, and where competition conditions are similar or homogeneous

Implementing regulations and case-specific rulings are expected to provide guidance on the definition of specific relevant markets. Until then, there remains room for flexibility in its application and it is for the parties to self-assess the relevant product and geographic markets.

Any of the above thresholds can be reached by one party alone; however, arguably only markets where the parties’ activities overlap or have a vertical relationship should be relevant for purposes of the filing thresholds as only transactions in those markets “would affect the level of competition” within the meaning of Article 12 (1) of the Competition Law.

TIMELINE AND PROCEDURE

Where the parties meet the relevant thresholds, they will need to submit a merger notification to the Department of Competition of the MOE (Competition Department) at least 90 days [4] prior to completion of the transaction.

Once the notification is deemed complete, the Competition Department has 90 days to issue a decision on the transaction. This review period may be extended by an additional 45 days if deemed necessary by the Competition Department. Any request for information from the Competition Department stops the clock. [5] During the review period, the relevant parties are prohibited from initiating any acts or procedures to complete the proposed economic concentration, and if no decision is issued within the review period, the transaction is deemed rejected (as opposed to the abrogated Federal Law No. 4 of 2012, under which a failure by the MOE to issue a decision was deemed an implicit approval). [6]

The Competition Department has the possibility to request stakeholders to express their opinion about the proposed economic concentration by publishing basic information about it on the MOE’s website. [7]

EXEMPTIONS

Under Article 4 of the Competition Law, the following are excluded from the merger filing obligation:

• Businesses active in sectors where a sectoral regulatory agency is responsible for setting and enforcing competition rules (unless the sectoral regulatory agency requests in writing that the MOE take over this responsibility, and the MOE agrees)
• Businesses owned by a government of an emirate, which carry out their activities in such emirate, as determined by a resolution by the local government
• Businesses owned by the UAE federal government, as determined by a Cabinet resolution, at the Minister's proposal and after coordination with the competent local authority. The new Competition Law removes the previous requirement that businesses be owned “or controlled" by the government to qualify for this exemption. This means that even semi-governmental entities partially owned by the government are potentially subject to the merger filing requirement, where relevant.

The availability of an exemption is subject to a case-by-case assessment and clearer guidance will only emerge with future federal and local government resolutions.

CONCLUSION

Given the entry into force of the new merger regime, businesses involved in M&A with revenue in the UAE should carefully assess their market position against the new thresholds. Any deal that is signed after 31 March 2025 is subject to the new merger control thresholds. A proactive compliance review can help mitigate risks and avoid substantial penalties.

Parties may at any time seek informal guidance from the Competition Department, which handles such requests promptly and effectively.

Under Article 24 of the Competition Law, failure to file a notifiable transaction—and thus not securing approval for a deal that meets either threshold—can lead to significant penalties. Businesses in violation may face fines ranging from 2% to 10% of their annual revenue generated from the sale of relevant goods or services within the UAE during the last fiscal year. If this revenue cannot be determined, fines will range from AED 500,000 to AED 5 million (approximately $136,000 to $1.36 million).

HOW WE CAN HELP

The Morgan Lewis team in the UAE, across Europe, the Middle East and Africa, and worldwide is ready to assist, monitoring regulatory developments and leveraging a strong network to ensure timely and informed guidance for our clients. Having already engaged the UAE regulator, we are well positioned to support our clients, including by preparing tailored requests for clarification where needed.