UAE’s New Merger Control Regime: Key Considerations for Businesses

The UAE’s new merger control regime introduces stricter regulatory enforcement, requiring businesses to assess transactions against new thresholds and ensure compliance with increased scrutiny by the MoE.

The United Arab Emirates (UAE) Cabinet recently issued Decision No. (3) of 2025 (the “Decision”), which clarifies the filing thresholds for mergers and acquisitions, set to take effect on March 31, 2025. Previously, the government had introduced significant changes to its competition framework with the enactment of Federal Law No. 36 of 2023 (the “Competition Law”), effective from December 29, 2023. The 2023 Competition Law had repealed and replaced Federal Law No. 4 of 2012.

These regulatory developments signal a stricter and more structured approach to merger control by the UAE Ministry of Economy (MoE). Businesses operating in the UAE must familiarize themselves with the new requirements to ensure compliance and avoid significant penalties.

Key changes under the new merger control regime

1. Notification requirements and thresholds

A transaction will be subject to merger control filing in the UAE if it meets both of the following conditions:

• Economic concentration test: The transaction involves a complete or partial transfer of ownership, usufruct rights, or obligations that grant one entity control over another. However, the Decision does not explicitly define “control,” leaving uncertainty regarding whether minority acquisitions or joint ventures will trigger notification requirements.
• Financial thresholds: At least one of the following conditions must be met:
  • Turnover threshold: The combined annual sales of the parties in the UAE exceed AED 300 million (approximately US$81.7 million) in the last fiscal year.
  • Market share threshold: The combined market share of the parties in the relevant UAE market exceeds 40 percent in the last fiscal year.

The turnover-based threshold is a new addition, potentially broadening the range of transactions requiring notification. Notably, it remains unclear whether the threshold applies to the combined turnover of all parties or can be triggered by a single entity’s revenue.

2. Increased scrutiny and stricter deadlines

• Transactions meeting the above thresholds must be notified to the MoE at least 90 days before completion—a significant increase from the previous 30-day requirement.
• Under the old regime, silence from the MoE was deemed as approval. However, under the new Competition Law, a lack of response before the expiry of the statutory review period is now considered a refusal of the transaction.

3. Strengthened penalties for non-compliance

Failure to notify a qualifying transaction may result in severe penalties:

• Fines ranging from 2 percent to 10 percent of the revenue generated from the relevant market in the UAE.
• If revenue in the UAE cannot be determined, penalties will range between AED 500,000 and AED 5 million.

Implications for businesses and M&A transactions

With the new regime coming into effect soon, businesses must take a proactive approach when planning mergers, acquisitions, and joint ventures in the UAE. Key considerations include:

• Transaction timeline adjustments: Given the longer approval process, companies must account for the 90-day notification period and potential review extensions when structuring deals.
• Due diligence on market share and turnover: Companies should assess whether their transaction meets the new thresholds and determine if notification is required.
• Clarification on joint ventures and minority investments: The broad definition of “economic concentration” raises concerns about whether joint ventures or acquisitions of minority stakes will be notifiable. Companies should seek legal advice to mitigate risks.
• Sector-specific exemptions: The Decision repealed many previous exemptions, except for entities owned by the UAE Federal or Emirate-level governments. Further clarification is expected through the upcoming Implementing Regulations.

Looking ahead: Need for more clarity in guidelines

While the Decision provides some further guidance, several uncertainties remain, including:

• The definition of “control” in the context of economic concentration.
• Whether the turnover threshold applies to individual or combined revenues.
• The extent of exemptions available for different sectors and business entities.
• The treatment of greenfield joint ventures and non-full-function joint ventures.

Legal experts hope that upcoming Implementing Regulations will address these issues and provide additional guidance on jurisdiction, review timelines, and penalty structures.

Conclusion

The UAE’s new merger control regime represents a significant shift in regulatory enforcement, requiring businesses to adopt a more strategic and compliant approach to M&A activities. Companies engaging in transactions with any UAE nexus must evaluate their deals against the new thresholds and prepare for more rigorous scrutiny by the MoE. As the UAE moves toward greater regulatory transparency, businesses should stay informed and seek expert guidance to navigate this evolving legal landscape.

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