Saudi Arabia Merger Control Thresholds 2026: SAR 200m Parties, SAR 40m Target

Any deal team contemplating M&A activity in or touching the Kingdom of Saudi Arabia must now contend with a clearer, and more consequential, set of filing triggers. The Saudi Arabia merger control thresholds established by the General Authority for Competition (GAC) under its 2025 Economic Concentration Review Guidelines require mandatory notification when a transaction meets three cumulative financial tests, centred on a combined worldwide turnover figure of SAR 200 million for the parties and SAR 40 million for the target. These revised saudi notification thresholds replace earlier, less granular guidance and carry real enforcement weight: failure to notify can result in substantial fines, interim measures, or even a forced unwinding of the deal.

This article provides a step-by-step decision framework, worked numerical examples, and a ready-to-use compliance checklist for M&A counsel, corporate development professionals, and private equity teams assessing their notification obligations in 2026.

Executive Summary: Who Must Notify and Why It Matters

Under the GAC’s 2025 Economic Concentration Review Guidelines, a transaction constitutes a notifiable “economic concentration” when it involves a merger, acquisition of control, or creation of a joint venture that meets all of the following cumulative conditions:

• Test 1, Combined worldwide turnover: The aggregate worldwide annual sales of all parties to the transaction are equal to or exceed SAR 200 million (approximately USD 53 million).
• Test 2, Target/party worldwide turnover: At least one other party to the concentration, typically the target, has worldwide annual sales of at least SAR 40 million (approximately USD 10.7 million).
• Test 3, Saudi nexus: The transaction creates an economic concentration with meaningful economic activity in the Kingdom of Saudi Arabia, as evidenced by local sales, assets, contracts, or employees attributable to the parties.

If all three tests are satisfied, the parties must file a GAC notification before closing. The regime is suspensory in substance, completing a notifiable transaction without clearance exposes the parties to fines and the risk that the Saudi Arabia competition authority may order divestiture or other remedies after the fact.

Legal Basis and Timeline of Changes (2023–2025 Guidelines)

Saudi Arabia’s merger control regime is rooted in the Competition Law (Royal Decree No. M/25, 2004, as amended) and its Implementing Regulations. The GAC, as the designated Saudi Arabia competition authority, has progressively refined the notification framework through successive guidelines and threshold adjustments. Understanding this timeline is essential for practitioners who need to determine which rules apply to a transaction signed or closing in 2026.

Key Dates and Regulatory Texts

The 2025 GAC merger review guidelines represent the most significant recalibration of the notification regime since the Competition Law was enacted. Practitioners should reference the official GAC Guidelines PDF as the primary source of authority.

Saudi Arabia Merger Control Thresholds Explained: Step-by-Step Notification Tests

The merger notification thresholds Saudi Arabia deal teams must assess are cumulative, all three must be met for a filing obligation to arise. Below is a detailed breakdown of each test, the applicable figures, and how to measure compliance.

Test 1, Combined Worldwide Turnover of Parties

The first test looks at the aggregate annual worldwide sales revenue of all parties to the economic concentration. “Parties” includes the acquirer and the target (and, in a JV scenario, all contributing participants). The threshold is SAR 200 million (approximately USD 53 million). Revenue is measured by reference to audited financial statements for the most recent completed financial year, consolidated at the group level where the party is part of a corporate group.

Test 2, Target (or at Least One Other Party) Worldwide Turnover

The second test requires that at least one other party to the concentration, typically the target entity, has worldwide annual sales of SAR 40 million (approximately USD 10.7 million) or more. This test ensures that genuinely small targets are excluded from the notification obligation even when the acquirer is a very large entity.

Test 3, Saudi Nexus (Meaningful Economic Activity)

Even where both financial tests are met, the GAC notification obligation only arises when the transaction has a sufficient connection to the Saudi market. The economic concentration review guidelines identify several factors used to establish nexus, including local sales revenue, customer contracts, assets located in Saudi Arabia, and the presence of employees or agents operating within the Kingdom.

Industry observers expect the GAC to interpret the nexus test pragmatically, a target that generates even modest but regular sales into KSA, or that holds Saudi government contracts, will likely meet the threshold. Where a target has zero direct or indirect Saudi sales and no local presence, the likely practical effect will be that no filing is required even if both financial tests are met.

How to Apply the Saudi Arabia Merger Control Thresholds: Worked Examples

Numbers make the analysis concrete. The following four scenarios illustrate how deal teams should apply the cumulative tests in practice.

Example 1, Domestic Acquisition

Facts: A Saudi industrial group (acquirer) with worldwide annual sales of SAR 500 million proposes to acquire 100 % of a Riyadh-based manufacturing company (target) with worldwide annual sales of SAR 80 million. Both entities generate the majority of their sales within Saudi Arabia.

• Test 1: Combined turnover = SAR 500m + SAR 80m = SAR 580m. Exceeds SAR 200m. ✓
• Test 2: Target turnover = SAR 80m. Exceeds SAR 40m. ✓
• Test 3: Both parties have substantial Saudi sales and operations. Nexus clearly met. ✓

Conclusion: This deal is notifiable. The parties must file with the GAC before closing.

Example 2, Foreign-to-Foreign Acquisition (No Saudi Sales)

Facts: A US private equity fund (acquirer; portfolio worldwide turnover SAR 2 billion) acquires a German technology company (target; worldwide turnover SAR 120 million). The target has no customers, sales, employees, or assets in Saudi Arabia.

• Test 1: Combined turnover = SAR 2bn + SAR 120m = SAR 2.12bn. Exceeds SAR 200m. ✓
• Test 2: Target turnover = SAR 120m. Exceeds SAR 40m. ✓
• Test 3: Target has no meaningful economic activity in KSA. Nexus not met. ✗

Conclusion: Despite both financial thresholds being exceeded, the absence of Saudi nexus means no GAC notification is required.

Example 3, Joint Venture Formation

Facts: Two multinational energy companies (each with worldwide turnover exceeding SAR 5 billion) form a new 50/50 JV to bid on Saudi upstream contracts. The JV will operate exclusively in Saudi Arabia.

• Test 1: Combined turnover of participants far exceeds SAR 200m. ✓
• Test 2: Each participant individually exceeds SAR 40m. ✓
• Test 3: The JV will operate in Saudi Arabia and participants already sell into KSA. Nexus clearly met. ✓

Conclusion: Notifiable. The formation of a full-function JV that constitutes an economic concentration must be filed with the GAC.

Example 4, Minority Stake Acquisition

Facts: A sovereign wealth fund acquires a 15 % stake in a Saudi listed company. The fund obtains no board seat, no veto rights, and no influence over commercial strategy. Combined turnover exceeds SAR 200m; the target’s turnover exceeds SAR 40m.

• Test 1: Financial test met. ✓
• Test 2: Financial test met. ✓
• Test 3: Nexus met (Saudi target). ✓
• Control / concentration assessment: No change of control, no coordinating influence, and no joint management, the transaction may not constitute an economic concentration under the Guidelines.

Conclusion: Likely not notifiable, because the acquisition does not give rise to an economic concentration. However, if the stake carries special rights (such as veto over strategic decisions), the analysis changes, seek specialist advice.

Special Cases: JVs, Minority Investments, Asset Deals and Carve-Outs

Certain transaction structures require careful analysis under the competition authority merger filing thresholds. The GAC’s approach to these scenarios, informed by the 2025 Guidelines, can be summarised as follows:

For foreign-to-foreign transactions specifically, the key question is whether the target (or its group) has any attributable Saudi sales, local contracts, or physical presence. Even indirect sales, for example, through a Saudi distributor, may be sufficient to establish nexus and trigger the revised saudi notification thresholds.

Saudi Nexus: Meaningful Economic Activity and the Local Sales Test

The 2025 Economic Concentration Review Guidelines elevated the nexus requirement from an implicit factor to an explicit, documented test. Deal teams should not assume that exceeding the financial thresholds alone triggers a filing. The GAC looks for concrete evidence of Saudi market participation.

Evidence That Creates a Saudi Nexus

• Direct Saudi sales: Revenue generated from customers located in KSA, whether by contract, invoice, or delivery.
• Indirect sales channels: Products or services sold into Saudi Arabia through local distributors, agents, or resellers.
• Local assets: Offices, warehouses, equipment, or inventory physically situated in the Kingdom.
• Employees and contractors: Staff based in Saudi Arabia or regular service provision within KSA territory.
• Government contracts: Current or recent contracts with Saudi public entities or state-owned enterprises.
• Intellectual property licensed into KSA: Technology or brand licences generating Saudi royalties or used by Saudi licensees.

Early indications suggest the GAC takes a substance-over-form approach: nominal or de minimis Saudi exposure (such as one-off spot sales with no repeat pattern) is unlikely to satisfy the nexus test, while sustained commercial engagement, even at moderate value, will. Where the position is borderline, pre-notification engagement with the GAC is the recommended course.

Filing Process, Timelines and Remedies: What to Expect

Once a deal team confirms that the Saudi Arabia merger control thresholds are met, the next step is assembling the filing and managing the timeline. The GAC process can be broken into the following stages:

The GAC notification process is essentially suspensory: parties should not close the transaction until clearance is obtained. Engaging experienced local M&A counsel and beginning the process in parallel with due diligence can materially shorten the overall deal timetable.

Enforcement, Penalties and Commercial Risks

The GAC has signalled its intent to enforce the notification regime actively. Potential consequences of failing to notify, or of closing before clearance, include:

• Financial penalties: Fines that can reach a significant percentage of revenue, scaled to the severity of the violation and the size of the parties.
• Interim measures: The GAC may order a hold-separate arrangement or other interim steps while it investigates a completed transaction.
• Transaction unwinding: In the most serious cases, the GAC retains the power to require partial or full divestiture of the acquired business.
• Reputational risk: Publicised enforcement actions may affect a party’s ability to secure future regulatory approvals, government contracts, or investor confidence.

The practical mitigation approach is straightforward: conduct the threshold analysis early, file proactively when the tests are met, and engage with the GAC before closing. Where the analysis is ambiguous, particularly on the nexus question, voluntary notification is almost always the safer path.

Practical Checklist for Deal Teams

Use this ready-to-implement checklist when evaluating any transaction that may engage Saudi merger control:

1. Obtain audited, group-level financial statements for all parties for the most recent completed financial year.
2. Calculate combined worldwide turnover of all parties. Does it meet or exceed SAR 200 million?
3. Calculate the target’s (or at least one other party’s) worldwide turnover separately. Does it meet or exceed SAR 40 million?
4. Identify any Saudi nexus: local sales, assets, employees, contracts, distributors, or IP licensees.
5. If all three tests are met, confirm the transaction structure, does it constitute an “economic concentration” (merger, acquisition of control, or full-function JV)?
6. For minority acquisitions, assess governance rights: board seats, veto powers, information rights, and coordination mechanisms.
7. Initiate pre-notification engagement with the GAC for complex or borderline transactions.
8. Assemble required filing documents: signed transaction agreements, audited financials, group structure charts, market-share estimates, competition analysis, and powers of attorney.
9. Build the GAC review timeline into the signing-to-closing timetable. Allow a minimum of 60–90 days for Phase 1 clearance, and longer for complex deals.
10. Draft appropriate conditionality clauses in the transaction agreement (e.g., a GAC clearance condition precedent, a long-stop date, and an allocation of risk for failure to obtain clearance).
11. Coordinate with competition counsel in other jurisdictions if the deal triggers parallel filings (e.g., in the UAE, EU, or the United States).
12. Consult with a qualified M&A lawyer through the Global Law Experts directory for a rapid, transaction-specific assessment.

Further Reading and How Global Law Experts Can Help

Navigating the Saudi Arabia merger control thresholds requires precise financial analysis, a clear-eyed assessment of Saudi nexus, and timely engagement with the GAC. The stakes, both financial and commercial, are high, and the enforcement environment is becoming progressively more active.

Global Law Experts connects deal teams with experienced M&A practitioners who advise on GAC filings, pre-notification strategy, and cross-border transaction structuring across the Gulf region. Browse our lawyer directory to find qualified competition and M&A counsel for your next Saudi transaction, or explore our international commercial law resources for broader jurisdictional guidance.

Sources

1. General Authority for Competition, Economic Concentration Review Guidelines (official PDF)
2. GAC / General Authority for Competition (agency page on national portal)
3. Chambers, Merger Control 2025: Saudi Arabia
4. Baker Botts, Saudi Arabia Responds to Investors with Revised Merger Guidelines
5. White & Case, Saudi Arabia’s General Authority for Competition Increases Its Merger Control Notification
6. HFW, GAC’s Updated Economic Concentration Review Guidelines: Impact on M&A and Joint Ventures
7. Legal500, Saudi Arabia: Merger Control
8. Bremer Law Firm, Revised Saudi Notification Thresholds and Implications for Transactions