Navigating Merger Control Under the UAE’s Updated Competition Law

UAE's New Competition Law: Strategic Insights for Merger Control

Introduction
The United Arab Emirates (UAE) continues to reinforce its position as a global investment hub through progressive legislative reforms. Central to this evolving landscape is the Federal Decree-Law No. 36 of 2023 on the Regulation of Competition (the "Competition Law"), a landmark enactment that significantly modernizes the UAE’s merger control framework. This new regime, repealing Federal Law No. 4 of 2012, introduces a sophisticated hybrid threshold system, expands jurisdictional reach, and embeds strategic considerations into every stage of deal structuring.

This article offers a comprehensive legal and commercial framework for interpreting and navigating the UAE’s enhanced merger control regime. It is specifically tailored for private equity sponsors, multinational acquirers, sovereign investors, and regulatory counsel operating across key sectors such as pharmaceuticals, technology, and infrastructure. The analysis provides in-depth insights into notification thresholds, substantive tests, procedural stages, and enforcement tools now vested with the Ministry of Economy and the Competition Regulation Committee (CRC). It also highlights critical alignments and divergences with international comparators, including the EU and GCC, necessitating proactive strategic foresight.

I. Core Features of the New Regime

The Competition Law, effective 23 October 2023, establishes a clearer and more sophisticated framework for merger control. Its implementation is further detailed by Cabinet Resolution No. 37 of 2024, which sets out the precise filing thresholds and procedural rules. Together, these instruments bring the UAE regime into closer alignment with global standards such as the EU Merger Regulation (Regulation EC No. 139/2004) and the OECD Guidelines for Merger Review.

Notably, the law shifts from a purely turnover-based approach to a hybrid threshold test that considers both turnover and market share. Under Article 6 of the Competition Law and Cabinet Resolution No. 37 of 2024, a transaction triggers mandatory pre-merger notification if:

• The combined annual turnover of the parties in the UAE exceeds AED 500 million; or
• The transaction results in the acquirer attaining a market share of 40% or more in a relevant market.

This two-tiered approach significantly broadens the scope of reportable transactions. It is particularly impactful in highly concentrated markets where dominant positions might be acquired through transactions with modest turnover.

Furthermore, Article 7 expands the scope of reviewable concentrations to include minority acquisitions and joint ventures that confer de facto control or "decisive influence," echoing the European Commission’s standard. This encompasses situations involving veto rights over strategic decisions (e.g., budget approvals, business plans), the ability to appoint or remove a majority of board members, or other governance mechanisms—even absent a majority shareholding.

Statutory timelines for review are strict. Under Article 12, the Ministry of Economy must issue a decision within 90 days (extendable to 135 days in complex cases). Penalties for non-compliance, including "gun-jumping" (premature implementation), are substantial, potentially reaching up to 5% of the annual UAE turnover generated from the concentration or an administrative fine of up to AED 50 million under Article 25(2), and may include nullification of the transaction.

II. Scope of Notification: What Triggers a Filing?

The new regime casts a wide net over what constitutes an "economic concentration" under Article 6. This is broadly defined to include mergers, acquisitions, full-function joint ventures, or asset purchases that lead to a change in control. The concept of "control" extends beyond legal ownership, encompassing the ability to exert strategic influence or decisive veto rights over the target’s operations, necessitating a meticulous legal assessment of shareholder agreements and transaction terms.

Importantly, Cabinet Resolution No. 37 of 2024 confirms that foreign-to-foreign transactions with a demonstrable UAE market nexus—such as local turnover or a substantial customer base—may also require notification. This extraterritorial reach mirrors global best practices and is expressly supported by Article 3 of the Competition Law. This means that even if the target has no physical presence but serves UAE customers (e.g., SaaS providers, e-commerce platforms), a filing could be triggered.

Key exemptions under Article 4 include:

• Temporary acquisitions by banks or financial institutions held for resale within one year;
• Intra-group restructurings with no third-party competitive effect;
• Transactions subject to sector-specific regulatory regimes.

Sector-specific overlays are critical for compliance. For example:

• Pharmaceutical transactions must also comply with Federal Law No. 8 of 2019 on Medical Products, which emphasizes supply continuity and pricing.
• Technology transactions involving data integration invoke obligations under Federal Decree-Law No. 45 of 2021 on the Protection of Personal Data.
• Telecommunications mergers require parallel approval from the Telecommunications and Digital Government Regulatory Authority (TDRA).
• Financial Services transactions are subject to review by the Central Bank of the UAE (CBUAE).

Where market shares are uncertain or close to thresholds, Article 10 permits voluntary filings. This is particularly useful in dynamic emerging markets, such as fintech or cloud computing, where market definition is still evolving.

III. Filing Mechanics and Substantive Review

The notification process is structured yet allows for strategic flexibility. While not strictly mandated, pre-notification consultations with the Ministry of Economy are strongly encouraged under Article 10. These consultations offer invaluable clarity on thresholds, scope, and, critically, the initial establishment of the "relevant market" definition – often the first point of contention in complex cases. This is particularly advantageous in sectors like biotech or SaaS where market delineation may be contested.

Formal filings, per the form set out under Cabinet Resolution No. 37 of 2024, must be submitted at least 90 days before closing and typically require:

• Transaction rationale and structure;
• Ownership and control information;
• Detailed market share analysis;
• Assessment of competitive effects and potential efficiencies.

The review process follows a bifurcated structure:

• Phase I (30 days, extendable to 45): A preliminary screening for obvious competition concerns. Clearance at this stage is common where overlaps are limited or easily mitigated.
• Phase II (90 days, extendable to 135): An in-depth investigation under Article 12 if initial concerns regarding market dominance or substantial lessening of competition arise. The CRC undertakes a deeper analysis of the transaction’s likely effect on market structure, barriers to entry, innovation, and consumer welfare.

Substantive review is guided by Article 11, which prohibits concentrations that "create or strengthen a dominant position or result in a substantial lessening of competition." Analytical tools commonly employed include:

• Herfindahl-Hirschman Index (HHI) for concentration analysis;
• Assessment of entry barriers and countervailing buyer power;
• Evaluation of implications for innovation and consumer welfare.

Parties may submit efficiency justifications under Article 11(2), demonstrating how the transaction results in pro-competitive benefits such as better pricing, enhanced innovation, or increased output. Where competitive concerns persist, the CRC may propose remedies, which can be structural commitments (e.g., divestitures of business lines) or behavioral undertakings (e.g., access obligations, non-discriminatory pricing). The enforcement of these remedies is often subject to ongoing monitoring by the Ministry of Economy.

Adverse decisions by the CRC may be challenged via administrative reconsideration under Article 29, or appealed before UAE civil courts under Federal Decree-Law No. 42 of 2022 on Civil Procedures.

IV. Enforcement Risk and Strategic Considerations

Merger control compliance must be integrated into every stage of M&A planning, particularly for cross-border deals subject to multi-jurisdictional filings.

• Timing Risk: The strict clearance timelines (up to 135 days) can impact long-stop dates and deal certainty, especially when parallel filings are required in jurisdictions such as the EU, US, or Saudi Arabia (under Royal Decree No. M/75 of 1440 AH on the Competition Law).
• Gun-Jumping Exposure: Premature implementation, including the exchange of competitively sensitive information or joint commercial activity prior to clearance, may trigger significant sanctions under Article 25. Robust clean team protocols, hold-separate agreements, and meticulously drafted interim covenants are critical safeguards.
• Structuring Strategies: Where competitive overlap exists, dealmakers can strategically structure transactions to mitigate antitrust exposure. This includes staggered acquisitions, minority footholds, or carve-out divestitures to pre-empt regulatory concerns. For instance, a private equity sponsor acquiring a healthcare platform might carve out an overlapping local generics portfolio. The increasing use of earn-outs or deferred payments can also manage valuation risk while aligning with competition concerns by deferring full control transfer.
• Due Diligence: Parties should conduct thorough pre-signing reviews of market shares, turnover thresholds, and sectoral exemptions. For complex transactions, engaging economic advisors for detailed market analysis or preparing counsel-led risk memoranda may be necessary to support internal approvals and third-party financing. Larger multinational entities should establish internal pre-merger review committees.
• Digital Market Nuances: Acquisitions in digital markets (e.g., data companies, SaaS providers) require specific attention to market definition, potential network effects, and the treatment of user data as an asset.

Key questions investors should address early in the process include:

1. Does the transaction exceed the filing thresholds under Cabinet Resolution No. 37 of 2024?
2. Could it confer de facto control or strategic influence under Article 7?
3. Are sector-specific approvals or exemptions applicable, particularly from regulators like the TDRA or CBUAE?
4. Has any conduct risked pre-clearance implementation (gun-jumping)?
5. How does the UAE clearance process align with parallel antitrust reviews globally?

Entities utilizing DIFC or ADGM structures must also carefully consider how offshore vehicles interact with UAE nexus thresholds, particularly for local turnover or customer base.

V. Regional and Comparative Landscape

The UAE’s Competition Law reflects a significant structural alignment with the EU Merger Regulation, notably in its two-phase review process, its dominance-based test, and its emphasis on relevant market definition. However, the UAE’s hybrid threshold regime (combining turnover and market share) introduces greater discretion but also potential ambiguity in borderline cases compared to the EU’s more objective financial thresholds.

Compared to the US Hart-Scott-Rodino Act, the UAE regime is still developing a comprehensive track record of enforcement and lacks the same extensive guidance or procedural predictability. Nevertheless, early enforcement actions, particularly in technology and pharmaceuticals, indicate a growing regulatory maturity.

Regionally, the UAE joins Saudi Arabia and Qatar in modernizing its competition enforcement. Saudi Arabia’s General Authority for Competition (GAC) has issued several high-profile merger decisions in recent years, signaling a proactive regional trend. Unlike some mature jurisdictions, the UAE’s Competition Law currently lacks explicit provisions for private enforcement actions (e.g., damages claims by affected competitors or consumers), making the Ministry of Economy’s direct enforcement actions paramount.

Under Article 28, the Ministry of Economy is explicitly empowered to cooperate with foreign competition authorities, signaling an increasingly coordinated approach to cross-border concentrations. This facilitates the alignment of remedy packages across jurisdictions, mitigating conflicting obligations for merging parties.

VI. Outlook and Recommendations

Anticipated developments include the issuance of comprehensive Executive Regulations which are expected to clarify filing methodologies, market delineation tools, and the process for digital submissions. Further sector-specific guidelines, particularly for digital markets, healthcare, and financial technology, are also expected.

To position for successful outcomes, dealmakers should:

1. Assess UAE nexus early in all global transactions.
2. Validate market shares rigorously, often requiring external economic analysis.
3. Engage in pre-notification dialogue with the Ministry of Economy to seek informal guidance.
4. Design robust clean team protocols and hold-separate agreements where integration planning is unavoidable.
5. Monitor sectoral updates from regulators such as the TDRA and CBUAE.
6. Consider implementing Competition Compliance Programs as part of post-merger integration for larger entities to manage ongoing risks.

Conclusion

The UAE’s Competition Law is not a mere procedural formality; it represents a substantive regulatory milestone that fundamentally reshapes how transactions must be structured and executed. As the UAE positions itself as a competitive, rules-based market for foreign capital under the broader UAE Vision 2071 and Principles of the 50, merger control compliance is no longer optional—it is a core workstream. Dealmakers must integrate competition clearance into their planning from the term sheet stage through to post-closing. By approaching competition law with rigor, strategic foresight, and a deep understanding of its nuances, stakeholders can mitigate legal risk, secure deal certainty, and capitalize on the UAE’s continued growth trajectory.