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With its strategic location, business-friendly environment, and openness to foreign investment, the United Arab Emirates (UAE) has become a key market for companies looking to expand their operations in the Middle East. However, businesses considering mergers and acquisitions services in Dubai need to be aware of the country’s merger control legislation and approval requirements.
The relevant legislation for merger control in the UAE is Federal Law No. 4 of 2012, known as the Competition Law, along with its implementing regulations under Cabinet Resolution No. 37 of 2014. Responsibility for reviewing mergers and acquisitions lies with the Competition Department of the Ministry of Economy.
The Competition Law is still in its early stages, having come into force in 2013. While it is modelled after EU competition law, there remain some gaps that are likely to be clarified through future cabinet resolutions. At present, there is limited precedent on how the law will be interpreted and applied.
The Competition Law requires parties to notify the authorities of any transaction that results in direct or indirect control of one entity over another, where the merged entity would hold a market share of at least 40%.
Unlike some jurisdictions, the UAE regime does not provide for voluntary notification – if the thresholds are met, notification is mandatory. The law applies to both full and partial acquisitions of interests, though the definition of “control” is not precisely specified.
The notification requirement extends to joint ventures and to transactions taking place abroad that may affect competition in the UAE markets. However, certain sectors like financial services, pharmaceuticals and transport are currently excluded from the scope of the Competition Law.
The Competition Law sets out two main criteria for determining whether a proposed M&A transaction requires approval:
While the 40% threshold is straightforward, the second substantive test creates some uncertainty. It appears to require a competition assessment even at the initial stage of evaluating whether notification is mandatory. It remains to be seen how this will be applied in practice.
Foreign-to-foreign deals must still be notified if the merged entity has UAE operations or sales exceeding the 40% local market share threshold. Separate approvals from sectoral regulators may also be required for foreign entities operating through local branches.
Regulators can exercise discretion to reject transactions based on public policy or national security factors, separate from competition law.
For companies pursuing M&A opportunities in the UAE, here are some tips:
With support from experienced advisors like IMC Group, companies can effectively navigate UAE’s merger control regime. IMC offers comprehensive due diligence services in Dubai to help investors evaluate opportunities, risks and approval requirements for successful M&A execution in the UAE.
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