In-Brief:
Following the enactment of Federal Decree-Law No. (36) of 2023 Regulating Competition (the Competition Law), the UAE Ministry of Economy (the Ministry) has adopted an increasingly active and conservative approach to merger control. Recent interactions with the Competition Department reveal a rigorous notification process that businesses must navigate carefully to ensure compliance with the new statutory framework.
This article outlines key practical insights regarding the filing process, documentation requirements, and the Ministry’s current stance on jurisdictional thresholds and review timelines under the Competition Law.
Jurisdictional Approach and “Control” The Ministry is taking a broad view of its jurisdiction under the Competition Law. Even where local revenue thresholds in the UAE appear limited, the Ministry may assert jurisdiction based on Article 3, which extends the law’s application to economic activities practiced outside the State if they affect competition within the State.
- Definition of Control: While Article 1 defines “Economic Concentration” as an act resulting in the transfer of ownership or rights empowering an undertaking to “control” another, the Competition Law does not provide a statutory definition of “control” itself.
- EU Analogy: In the absence of a specific definition in the law, the Ministry accepts the European Union’s concept of control by analogy. Parties should be prepared to demonstrate control dynamics (e.g., joint control, veto rights, board composition) using EU-style analysis.
- Concerned Establishments: The definition of “concerned establishments” is interpreted broadly to include the ultimate parent entities and their consolidated groups, not merely the immediate contracting entities.
The “Adverse Effect” Determination Crucially, the Ministry maintains that the assessment of whether a transaction will adversely affect competition is a subjective test to be conducted solely by the authority under Article 15, and cannot be predetermined by the concerned establishments.
Consequently, the obligation to file a notification is triggered exclusively by the satisfaction of the statutory financial or market share thresholds set out in Article 12(1). Parties cannot rely on their own autonomous assessment that the transaction will have no negative impact on competition as a basis for failing to notify. If the thresholds in Article 12 are met, the filing is mandatory regardless of the parties’ view on the substantive competitive impact.
The Notification Process There is currently no formal online portal for merger control filings. Notifications are submitted directly via email to the Ministry. While the process is evolving, the following requirements are standard:
1. Documentation Pursuant to Article 12, the Ministry requires a comprehensive suite of documents, including:
- Official Notification Form: Parties must use the form designated by the Ministry rather than submitting a standalone memorandum.
- Transaction Documents: A final executed Share Purchase Agreement (SPA) or Joint Venture Agreement (JVA) is typically required.
- Economic Impact Report: Parties must submit a report on the potential economic dimensions of the concentration. There is no formal template for this; it should be a study of the local market highlighting both positive and negative effects of the transaction.
- Corporate Documents: Certified/attested Memorandum and Articles of Association, financial statements (past two years), and trade licenses.
2. Attestation and Translation
- Attestation: Constitutional documents and Powers of Attorney (PoA) must be notarized, apostilled (where applicable), and attested by the UAE Ministry of Foreign Affairs. This process can take 4–6 weeks, and, in some circumstances, longer, particularly where concerned establishments are outside of the UAE and effective attestation is also subject to their own domestic laws and requirements.
- Language: While the law generally requires Arabic translations of all required documents, the Ministry has shown flexibility in accepting English-only documents for their initial review, with Arabic translations to follow upon request.
3. Power of Attorney (PoA)
A specific PoA is required for legal representation. It must expressly authorise counsel to:
- Submit notifications and filings.
- Respond to information requests.
- Challenge and appeal decisions (per Article 34).
- Represent the parties in settlement discussions.
Strategic Considerations: Timing and Agreements
A critical strategic decision involves when to file. Article 12(1) requires the application to be submitted at least 90 days prior to the completion of the concentration.
- MoU vs. Definitive Agreements: The Ministry generally expects a final, binding agreement to consider a file complete. However, filing based on a Memorandum of Understanding (MoU) or Letter of Intent is often strategically advisable to secure a place in the review queue.
- Risk of Delay: Waiting for definitive agreements may delay the start of the review period. Filing early allows parties to address information requests in parallel with finalizing transaction documents.
Review Timelines: Statute vs. Reality Businesses must manage expectations regarding approval timelines, as practice often diverges from the statutory text.
- Statutory Period: Article 13(2) sets a review period of 90 days, which can be extended by a further 45 days.
- Deemed Rejection: Article 13(2) explicitly states that a failure by the Minister to issue a resolution within this period shall be deemed a rejection of the economic concentration.
- Practical Reality: In practice, however, the “deemed rejection” provision is not strictly applied, and we see Ministry reviews frequently extending beyond the statutory maximum of 135 days, often taking six months or longer, with approvals being granted well after the deadline has passed.
Conclusion Parties entering into transactions with a UAE nexus should anticipate a detailed substantive review and a protracted timeline. We recommend including a longstop date of at least six months in transaction agreements to accommodate the Ministry’s review process. Early engagement and the preparation of robust economic analysis are essential for a smooth clearance process.
If you require any further information in this regard, please reach out to Victoria Woods, Partner, Head of Commercial at v.woods@hadefpartners.com or Omar Al Heloo, Partner, Dispute Resolution at o.alheloo@hadefpartners.com.