Legal Overview on UAE Announces Turnover Thresholds for Merger Filings

UAE Announces Turnover Thresholds for Merger Filings

The United Arab Emirates (UAE) is embarking on a new era in its competition law regime with the recent publication of Ministerial Decree No. 3 of 2025 (the "Turnover Decision"), which finally determines the long-awaited turnover thresholds for merger control filings. Applying from 31 March 2025, these thresholds are a major milestone in the UAE's competition regime, bringing the country closer to international best practices and giving companies much-needed certainty about their notification requirements.

This article discusses the background to these developments, outlines the new thresholds, analyzes their implications, and identifies the areas that still need to be fleshed out through the upcoming Implementing Regulations.

The competition regime of the UAE has been the focus of increasing attention over the past few years. Being one of the most vibrant economies in the region, with rising foreign direct investment, cross-border transactions, and corporate mergers, the UAE has long felt the need for a contemporary, stable merger control regime.

In November 2023, the UAE issued a new Federal Decree-Law No. 36 of 2023 (the "New Competition Law") to replace its outdated competition law and bring about sweeping reforms, including a new merger control framework. Nevertheless, whereas the New Competition Law created the notion of "Economic Concentration" and required notifiable qualifying transactions to be notified, it failed to specify the thresholds above which filings would be necessary.

This default placed companies in a state of confusion since the thresholds are essential in deciding whether a merger, acquisition, or joint venture should be filed for review by the UAE Ministry of Economy (MOE). That confusion has now been cleared with the release of the Turnover Decision in January 2025, supplying vital information on when deals should be notified.

The Turnover Decision

According to Ministerial Decree No. 3 of 2025, notification of an Economic Concentration is required if either of the following thresholds is exceeded:

I.             Turnover Threshold

A filing is necessary if the aggregate total annual sales of the parties within the Relevant Market in the UAE exceed AED 300 million (around USD 81.6 million) in the most recent fiscal year.

II.            Market Share Threshold

A filing is necessary if the parties' joint market share is more than 40% of overall sales in the Relevant Market in the UAE during the most recent fiscal year.

These thresholds bring a more structured and foresighted method of merger control in the UAE. The dual threshold system provides a guarantee that transactions with considerable economic impact on the UAE market are reviewed, whereas smaller transactions with no significant local nexus can proceed free from regulatory interference.

What is the "Relevant Market"?

Knowledge of the scope of the turnover and market share levels needs an examination of the notion of the Relevant Market, as set out under the New Competition Law:

      i.        Relevant Product Market

This consists of products or services that, on account of their price, nature, and intended use, are regarded as substitutable to meet a particular consumer demand.

    ii.        Relevant Geographic Market

This is the physical or electronic area where demand and supply for goods or services meet under analogous competitive conditions.

The definition of the Relevant Market is important as the thresholds pertain only to the parties' turnover and market share within the Relevant Market within the UAE. This poses interpretative issues that will have a substantial bearing on the enforcement of the law, most notably in cross-border business and sectors with international markets. For instance, if a market is broadly defined globally, does this lower the probability of the UAE's thresholds being triggered? Or will regulators adopt a more localized perspective?

Practical application of these definitions, therefore, will need to be considered on a case-by-case basis, and additional clarification is anticipated soon by way of guidelines or future decisional practice.

Dominant Position Threshold

Apart from merger control thresholds, the Turnover Decision also codifies criteria for identifying dominance in the UAE market.

A company will be said to have a dominant position if it has a market share of more than 40% of the overall sales within the Relevant Market, either alone or in combination with other entities. Holding a dominant position by itself is not illegal, but companies under this position are restrained from indulging in practices that would lead to anticompetitive harm, for example, discriminatory pricing, exclusionary conduct, or maltreatment of market power.

This is in conformity with the world competition regime where leading firms face more examination but are not invariably punished on grounds of their success or size.

Expected Implementing Regulations

Though the Turnover Decision is a landmark, the competition regime in the UAE is not yet complete until the Implementing Regulations of the New Competition Law are issued, due later in 2025. The Implementing Regulations will probably settle various pending issues vital to the new merger control regime being effective and efficient.

They include:

     i.        Filing Fees

Companies wait for assurance on fees for filing, which must be reasonable and not stifle legitimate business through high costs.

    ii.        Government Exemptions

It is unclear if partially government-owned companies will enjoy exemptions or special treatment under the new regime.

  iii.        Legalization of Documents

The practices in the UAE today tend to involve extensive document legalization, thereby taking time and money out of transactions. This needs to be eased, especially for multinational transactions.

  iv.        Fast-Track Procedures

The establishment of a fast-track mechanism for transactions with limited competitive overlap would bring certainty and expedition to simple cases.

    v.        Minority Shareholdings and Control

Advice on when minority shareholdings constitute control would be helpful. This absence of clarity would lead to uncertainty on the part of parties as to whether or not a transaction invokes notification obligations.

  vi.        Local Carve-Outs and Hold-Separate Agreements

For cross-border transactions, regulators can take into account local carve-outs or hold-separate structures to address local competition issues while enabling global deals to go through.

 vii.        Joint Ventures

Guidelines to differentiate between full-function and non-full-function joint ventures will assist companies in determining whether their collaborative activities need notification.

Impact on Businesses

The turn to the turnover threshold is an encouraging step that provides companies with more predictability and brings the UAE's competition regime in line with global norms. Under the old system, merger control under the UAE used to be concerned only with market share thresholds, which tended to be uncertain, particularly in those markets where high-quality market share data is not readily available.

With the turnover threshold now established, companies can better determine their notification requirements based on financial information, decreasing legal uncertainty and enhancing compliance planning.

Nonetheless, though the focus on turnover within the Relevant Market in the UAE in the threshold is aimed at the capture of local-nexus transactions, the question still exists regarding the scope in which and breadth with which the Relevant Market would be delineated in reality. The acid test shall await the time that the MOE actually reviews the transactions under the new system and builds interpretive precedents.

Conclusion

The UAE's declaration of turnover thresholds for merger control is a watershed moment for competition law in the region. With the insertion of objective, transparent criteria for compulsory filings, the UAE is imparting to its market the message that it is dedicated to promoting a competitive and transparent marketplace.

However, as companies ready themselves for the changes effective March 31, 2025, keen eyes must be on the upcoming Implementing Regulations and actual enforcement by the MOE. In the meantime, there will be some uncertainties, most notably about procedures, exemptions, and substantive guidelines.

For businesses doing business in or doing business with the UAE, it is time to examine internal practices, chart potential notice requirements, and remain aware of regulatory developments. As the UAE continues to develop its competition regime, active compliance will be key to successfully navigating this changing environment.