GAC’s updated Economic Concentration Review Guidelines: Impact on M&A & Joint Ventures

In April 2025, the Saudi General Authority for Competition (GAC) released a new version of its Economic Concentration Review Guidelines (Version 5), introducing a range of substantive revisions to the Kingdom’s merger control framework.

The updated manual, which supersedes the November 2023 edition, aims to align the practice at similar levels of best practices and global standards, providing enhanced clarity on notification requirements, the assessment of joint ventures and investment structures, and the substantive test applied in reviewing transactions.

This article outlines the key developments introduced in the new guidelines and examines their practical implications for merger and acquisition transactions (M&As) and joint ventures. It is intended to assist with navigating the excelling Saudi antitrust regime.

A refined framework for assessing joint ventures

While the concept of full-function joint ventures has long been part of the GAC’s merger review approach, the 2025 guidelines provide a significantly expanded and clarified framework for determining when a joint venture constitutes an economic concentration subject to notification, which commonly is placed as condition precedent in such joint venture agreements, needless to mention the cost sharing element should such joint venture be of a notifiable nature (in one or more jurisdictions).

A joint venture will be considered notifiable where it qualifies as a full-function joint venture—that is, one which operates as an independent, self-standing economic undertaking on a lasting basis. This definition, previously acknowledged in earlier versions of the guidelines, has now been supplemented with detailed explanations, practical examples, and a more structured assessment methodology.

GAC considers a joint venture to be full-function where it performs the functions normally carried out by an autonomous commercial enterprise in the relevant market. This includes having independent management, dedicated assets and staff, its own financing, and a degree of operational separation from its parent companies. Joint ventures that are limited to internal coordination, R&D support, or sales functions are generally not regarded as full-function and may not necessarily be subject to the notification obligation.

The expanded discussion in the 2025 guidelines helps clarify grey areas—such as whether a JV that is not regarded as a fully-functional vehicle at inception, may become notifiable if its role evolves. This is especially relevant in sectors where strategic partnerships often begin as limited-scope collaborations but mature into independent market players over time.

As a result, parties forming joint ventures must now approach notification analysis with a more structured and evidence-based understanding of what constitutes full-functionality. The Economic Concentration division at GAC are now more advanced than any time in the past, especially in terms of their review optics. While the legal standard itself remains unchanged, its application has become more rigorous and transparent.

Investment structures and control

The updated guidelines provide a more robust and nuanced analysis of “control”, which remains the central legal threshold for determining whether a transaction constitutes an economic concentration or not. The GAC now explicitly recognises both positive and negative forms of control, as well as joint control and de facto control.

Positive control refers to the ability of a party to impose strategic decisions on another undertaking, while negative control denotes the power to block such decisions. Joint control may arise through shareholding arrangements, governance rights, or even structural relationships such as familial or social ties. In certain cases, control may be established through economic dependence or long-term contractual relationships.

The guidelines are also notable in how they implicitly incorporate investment funds’ structures into the competition law framework. By applying the “single economic entity” doctrine, the GAC will look beyond the immediate transaction vehicle to consider the broader investment group, including fund managers and parent entities, when assessing control and calculating annual sales value. This reflects a clear intention to prevent artificial fragmentation of ownership from circumventing the law.

Validity period and procedural timelines

Under the revised framework, any approval—whether unconditional or subject to remedies—granted by GAC in respect of a notified economic concentration, is valid for a period of one calendar year. Parties that fail to complete their respective transaction within such period must request an extension and provide justifications acceptable by GAC. This formalisation of the approval validity period introduces additional discipline to deal timelines, which in effect will impact sequencing in cross-border transactions requiring multi-jurisdictional clearance. Naturally, the more jurisdictions involved, the more likely parties of a transaction will seek GAC’s approval for an extension.

Jurisdictional scope and notification thresholds

The updated guidelines reiterate the expansive jurisdiction of GAC. The authority asserts jurisdiction not only over undertakings established in the Kingdom but also over foreign-to-foreign transactions that may have a direct, substantial, and reasonably foreseeable effect on competition in Saudi Arabia.

To trigger a mandatory notification, a transaction must meet three cumulative financial thresholds.

1. The combined worldwide annual sales value of the relevant parties must exceed SAR 200 million.
2. The annual sales value of certain parties—depending on the transaction type—must exceed SAR 40 million.
3. The combined annual sales value of the relevant parties within the Kingdom must also exceed SAR 40 million.

While these thresholds apply across all forms of economic concentrations, the parties to whom they apply, vary depending on the transaction structure.

Acquisitions: the combined worldwide annual sales value of the acquirer and the target must exceed SAR 200 million. In addition, the target must alone exceed SAR 40 million in global sales, and the combined Saudi sales of both the acquirer and the target must exceed SAR 40 million. Crucially, the Saudi component must include the target’s local sales; otherwise, the transaction may fall outside the GAC’s jurisdiction.

Mergers: all merging undertakings are assessed together for purposes of the SAR 200 million and SAR 40 million domestic thresholds. However, at least two merging parties must individually exceed SAR 40 million in global annual sales to satisfy the second threshold.

Joint Ventures: the thresholds are assessed with reference to the parent undertakings that will jointly control the new entity. Their combined global sales must exceed SAR 200 million; at least two of those parents must individually exceed SAR 40 million in worldwide sales; and their combined Saudi sales must also exceed SAR 40 million.

Market definition: Analytical foundation of the competition test

Defining the “relevant market” is one of the key metrics of any filing made to GAC’s Economic Concentration Division, and also as important to others who are assessing whether to file or not.

The guidelines reinforce the centrality of market definition to GAC’s competition analysis. A relevant market is defined in both product and geographic terms, comprising products or services that are reasonably substitutable and geographic areas where competitive conditions are sufficiently homogenous.

In defining markets, GAC considers both demand-side and supply-side substitutability, the competitive dynamics of different functional levels (such as wholesale and retail), and the impact of potential competition. The market definition adopted by the authority will inform the entire assessment of competitive harm, including the identification of dominance, barriers to entry, and the likely effect on prices, innovation, and consumer choice.

Exemptions for certain joint ventures and state-owned entities

A noteworthy clarification introduced in the 2025 guidelines concerns a targeted exemption for joint ventures. Where a joint venture is formed for the manufacture of a product not currently manufactured in the Kingdom, and where the shareholders are neither actual nor potential competitors in that product market, the transaction may be exempt from notification. The exemption reflects a pragmatic approach intended to facilitate industrial investment in sectors that are nascent or underdeveloped in Saudi Arabia, particularly where no competitive overlap exists. Evidently, it will remain subject to GAC’s sole assessment and direction.

The guidelines also confirm the continued availability of exemptions for wholly state-owned entities that have been expressly authorised by royal decree or similar instruments to provide certain goods or services. However, such exemptions apply strictly to the authorised activity and are lost if the state’s ownership drops below 100 per cent or if the transaction relates to a different line of business.

Remedies and conditional approvals

In cases where a notified transaction raises serious competition concerns, GAC may prohibit the transaction outright or impose remedies as condition(s) for approval. Remedies may be structural, such as independent management, divestiture of a business unit, or behavioural, such as obligations to provide access, pricing commitments, or non-discrimination undertakings.

The authority expresses a clear preference for structural remedies, consistent with international best practices. Parties are encouraged to propose remedies at an early stage in the review process, particularly where concerns are foreseeable. GAC may engage in consultations with third parties and may appoint trustees to monitor compliance where appropriate. The guidelines also emphasise that remedies must be proportionate, enforceable, and effective in addressing the identified harm.

Implications for transaction planning

The revised guidelines signal GAC’s continued commitment to developing a transparent, enforceable, and investor-friendly competition regime. However, they also impose a heightened level of regulatory scrutiny and legal sophistication. Parties to M&A transactions (particularly those involving minority interests), joint ventures, or investment fund structures, must now assess with greater precision whether a notification obligation arises and whether the transaction could give rise to substantive competition concerns, present at inception or planned in the foreseeable future.

Moreover, given the authority’s broad jurisdictional reach and detailed framework for reviewing economic concentrations, early engagement with competition counsel and, where appropriate, pre-notification discussions with GAC are strongly advised, especially with GAC’s authority to impose fines and most importantly, their authority to unwind the related definitive agreements.

Conclusion

The April 2025 Economic Concentration Review Guidelines represent a substantial step forward in the development of merger control in the Kingdom of Saudi Arabia. By clarifying procedural obligations, introducing well-defined concepts of control and market definition, and outlining exemptions and remedies in detail, GAC has enhanced both legal certainty and regulatory predictability. At the same time, the guidelines demand a higher standard of compliance and proactive risk management from legal practitioners and dealmakers operating in or connected to the Kingdom.

Saudi Arabia’s competition law regime is evolving rapidly. Legal advisers and businesses alike would do well to remain attuned to its trajectory, particularly as the Kingdom continues to position itself as a hub for investment and economic diversification under Vision 2030.