The UAE has made significant strides in improving its competition law framework, introducing pivotal changes to merger control which might be anticipated to reshape the regulatory panorama for businesses. The new government policies for Federal Decree-Law No. 37 of 2023 at the Regulation of Competition (the 2023 Law), issued under Cabinet Resolution No. 3 of 2025 (the 2025 Resolution), bring greater clarity on the thresholds for triggering a merger control notification. With the 2025 Resolution set to come into effect by the end of March 2025, businesses now have more precise guidelines to evaluate whether or not their transactions require regulatory approval.
A Transformative Shift in UAE Competition Law
To foster an extra competitive and transparent marketplace, the UAE replaced Federal Law No. 4 of 2012 (the 2012 Law) with the 2023 Law. One of the essential changes under the brand-new framework relates to the merger control regime. Previously, under the 2012 Law, mergers that led to economic concentration (described as changes in ownership or control) required approval in the event that they caused the introduction of a dominant marketplace position. However, the criteria were often seen as vague, with no clear turnover thresholds.
The introduction of the 2023 Law refines those parameters, setting up concrete thresholds to decide while a merger should be notified for regulatory approval. The specifics of those thresholds have been left to be clarified withinside the 2025 Resolution, which has now been released, providing businesses a clear roadmap for UAE merger control compliance.
Scope of Applicability
The 2023 Law has a broad reach, overlaying economic activities in the UAE in addition to the ones out of doors the UAE which have an effect at the opposition panorama withinside the country. This expands the definition of the Relevant Market to include not only physical products and services but only digital markets, reflecting the UAE’s commitment to regulating new-age businesses effectively.
Key Criteria for Merger Control
Under the previous framework, economic concentration was evaluated by assessing whether or not a transaction caused a dominant position withinside the marketplace. The 2012 Law set a marketplace proportion threshold of 40% to trigger a merger control notification. However, this benchmark often caused uncertainty, as certain transactions involving high-revenue organizations, but lower market shares could fall outside the regulatory scope.
The 2023 Law remedies this by introducing a dual threshold system based totally on marketplace proportion and annual turnover. The new standards, that allows you to be enforced beginning with the 2025 Resolution, encompass the following:
- Annual Turnover Threshold: If the full annual income of the entities concerned withinside the merger exceeds AED 300,000,000 withinside the Relevant Market at some stage in the preceding economic year.
- Market Share Threshold: If the blended marketplace proportion of the events exceeds 40% of the full transactions withinside the Relevant Market at some stage in the preceding economic year.
This new technique facilitates address gaps in the previous system, making it easier for businesses to evaluate whether or not their transactions require a merger control filing.
Exemptions Under the 2023 Law
Unlike the 2012 Law, which exempted certain sectors like oil and gas, pharmaceuticals, telecommunications, and financial services, the 2023 Law takes a one-of-a-kind technique via means of getting rid of sectoral exemptions. Under the brand-new regulation, entities owned by the government are exempt from merger control filings, as are agreements or contracts associated with unique goods or offerings which might be regulated by other laws.
While those exemptions offer some relief, businesses in sectors not particularly exempted will need to be mindful of the new UAE merger filing thresholds as they determine potential mergers and acquisitions.
Timeline for Merger Notification and Clearance
The 2023 Law introduces a clear timeline for the merger notification process. Businesses should file a merger control notification with the UAE Ministry of Economy at least 90 ninety days earlier than finishing the transaction. Once the Ministry of Economy gets the filing, it has 90 days (extendable via way of means of a further 45 days) to issue a decision. If the Ministry does not render a decision within this period, the application is deemed rejected, marking a departure from the previous system where a lack of reaction was treated as approval. This shift in technique introduces new uncertainty into the deal-making process, with the ability for delays withinside the clearance of transactions.
Fines for Non-Compliance
Companies that fail to notify the Ministry of Economy while required may also face significant fines. The penalty can range from AED 100,000 to 10% of the full annual revenue generated by the company withinside the UAE at some stage in the previous fiscal year. If the revenue cannot be determined, fines may also vary between AED 500,000 and AED 5,000,000, developing a robust incentive for businesses to stick to the brand new regulations.
Conclusion
The new thresholds for market share and turnover-based filings, along the clearer policies laid out withinside the 2025 Resolution, offer more actuality for businesses navigating the UAE’s merger control panorama. However, the introduction of a 90-day notification period and the deemed rejection provision introduces ability delays that businesses should element into their transaction timelines. The new framework displays the UAE’s commitment to fostering opposition whilst making sure that businesses apprehend their duties under the regulation. Moving forward, organizations need to carefully reveal their merger and acquisition activities and seek advice from legal experts to ensure compliance with the evolving competitive framework.
By aligning their commercial enterprise practices with those new guidelines, companies can avoid penalties and ensure that their growth strategies follow the UAE’s competitive marketplace standards.
How ebs chartered accountants can Assist?
ebs Chartered Accountants can play a pivotal position in helping businesses with merger control compliance beneath the UAE’s new competition framework. With their enjoyment of mergers and acquisitions, they offer businesses the right insights needed to navigate the complexities of the UAE’s evolving competition landscape.
FAQs
What is the new corporate tax in the UAE?
The UAE is introducing a federal corporate tax on business profits starting June 2023, with rates varying based on profit levels.
Who is affected by the new corporate tax?
All businesses operating in the UAE, including branches of foreign companies, are subject to the new tax unless exempted.
What are the compliance steps for businesses?
Businesses must register for tax, track taxable income, prepare tax filings, and ensure compliance with new regulations.
When does the new corporate tax take effect?
The new tax system will be implemented on June 1, 2023, and businesses will need to comply with it for their financial years starting after this date.