UAE’s Merger Control Rules: What Businesses Need to Know About the New AED 300 Million Threshold

The UAE has announced one of the most significant reforms to its competition and merger control regime with the introduction of a new AED 300 million turnover threshold for merger notifications, implemented under the January 2025 Cabinet Decision. Effective March 31, 2025, this change marks a profound shift in how businesses assess their merger filing obligations in the UAE, aligning the country with international best practices and substantially expanding the scope of transactions that will require regulatory review.

A Dual-Threshold System: A New Era of Merger Notification

For the first time, the UAE’s competition law introduces a turnover based test alongside the existing 40% combined market share requirement. Parties must now notify and obtain merger clearance if either:

• The combined annual turnover in the relevant UAE market exceeds AED 300 million; or
• The combined market share of the parties exceeds 40% in the most recent fiscal year.

This dual approach captures a significantly broader set of transactions than the previous regime, which relied solely on the market share assessment, a metric that often lacked clarity and was difficult to calculate in dynamic or emerging sectors.

What Counts Toward the AED 300 Million Threshold?

The law refers to turnover generated in the “relevant market,” but initial interpretations differ regarding whether this refers to:

• Turnover specifically tied to the product or service involved in the transaction; or
• All revenue generated in the UAE by the merging parties.

Further clarification is expected through implementing regulations, but until such guidance is issued, businesses should adopt a conservative approach when determining their notification obligations.

Mandatory and Suspensory: Deals Cannot Close Without Approval

The UAE maintains its mandatory and suspensory merger control system. This means:

• Parties must notify before closing.
• Parties must wait for regulatory clearance.
• Closing before clearance constitutes a violation subject to penalties.

Importantly, the new regulation extends the notification period significantly. Businesses must now notify the UAE Ministry of Economy at least 90 calendar days before closing, a marked increase from the previous 30 day requirement under the 2023 Competition Law.

Key Timelines Under the New Regime

• January 2025 – Cabinet Decision introducing the turnover threshold is issued.
• March 31, 2025 – New merger filing rules become enforceable.
• Notification deadline – 90 days prior to closing.

The extended notification period provides regulators more time for review but also requires businesses to incorporate earlier clearance planning into their transactional timelines.

A Broader Range of Transactions Now Captured

The introduction of a turnover threshold is expected to sweep in mergers and acquisitions that may not have triggered the previous market share test, particularly in sectors such as:

• Technology and digital services
• Healthcare and pharmaceuticals
• Retail and consumer goods
• Financial services
• F&B and hospitality

Even companies with lower market shares may now require clearance if their combined revenues cross the AED 300 million threshold.

Penalties for Non-Compliance Are Stricter

Failing to notify when required, or closing a transaction without approval, carries serious financial consequences. Penalties include:

• 2%–10% of annual UAE revenues for relevant products or services; or
• Up to AED 5 million if revenues cannot be determined.

Given the potential scale of these fines, large multinational groups and high-revenue domestic companies must exercise caution during deal structuring.

Remaining Questions Await Regulatory Clarification

Despite the increased certainty offered by the turnover threshold, some questions remain open, including:

• Does “relevant market turnover” refer exclusively to revenue from the merging business line, or all UAE revenue?
• Can one party alone trigger the AED 300 million threshold?
• How will the Ministry of Economy evaluate cross-border transactions with limited in-country presence?

The forthcoming implementing regulations are expected to address these issues and bring further clarity for businesses and legal advisors.

Why This Reform Matters for M&A in the UAE

The updated merger control rules reflect the UAE’s ambition to strengthen competition oversight and align with the standards of advanced jurisdictions such as the EU, UK, and Singapore. The reforms are expected to:

• Increase transparency and predictability for businesses
• Improve early-stage deal assessment
• Prevent anti-competitive concentrations
• Enhance regulatory efficiency
• Support fair competition and consumer protection

What Businesses Should Do Now

With the new rules coming into effect soon, companies engaged in M&A activity should:

• Conduct early turnover analyses to determine if thresholds are triggered
• Integrate merger control assessments into deal strategy from the outset
• Prepare for extended transaction timelines
• Monitor upcoming regulations for further clarifications
• Consult legal experts to ensure compliance with notification obligations

Conclusion

The introduction of the AED 300 million turnover threshold marks a transformative step for UAE competition law, modernizing the merger control regime and providing businesses with clearer, more predictable notification criteria. As the UAE strengthens its position as a global commercial hub, companies must carefully assess their obligations under the new dual-threshold system to avoid penalties and ensure smooth transactional execution.

For businesses seeking guidance, Al Kabban & Associates, with over 30 years of experience in UAE law and recognition by Legal 500, stands ready to help corporations build resilience against legal risks while ensuring compliance with local and international standards.

For more information or to schedule a consultation, contact us at +971 4 453 9090 or visit www.alkabban.com.

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