UAE Competition Clearance for Mergers and Acquisitions

Yes, if the deal crosses either of two thresholds, and the regime is suspensory

Since 31 March 2025, the UAE operates a mandatory pre-closing merger control regime under Federal Decree-Law No. 36 of 2023 on the Regulation of Competition. Parties that close a notifiable transaction without clearance from the Ministry of Economy face fines, potential nullity, and deal disruption.

• Two alternative filing thresholds apply. A mandatory notification is triggered if the parties' combined UAE turnover in the relevant market exceeds AED 300 million, or if their combined UAE market share in the relevant market exceeds 40%. Either threshold is sufficient on its own. These were set by Cabinet Decision No. 3 of 2025, published in the Official Gazette on 30 January 2025 and effective from 31 March 2025.
• The regime is pre-closing and suspensory. Parties must notify the Ministry of Economy at least 90 days before the planned closing date. They cannot complete the transaction until the Ministry issues clearance. Closing before clearance is a gun-jumping violation.
• Penalties are steep. Failure to notify when required exposes the parties to fines of between 2% and 10% of their combined UAE annual revenue in the preceding financial year. Premature closing (gun-jumping) carries a separate fine of AED 50,000 to AED 500,000.
• The Ministry can approve, approve with conditions, or reject. If the Ministry does not issue a decision within 90 days (extendable by 45 days), the transaction is deemed rejected. This is a reversal from the old 2012 law, under which silence meant deemed approval.
• Sector exemptions exist, but they are narrow. Government-owned or controlled entities benefit from exemptions. Certain prescribed sectors including telecommunications, petroleum, and pharmaceutical manufacturing and distribution are subject to their own regulatory regimes and are expressly excluded from the Competition Law.

Who this applies to

This article is for companies acquiring or merging with businesses that have UAE revenues, market share, or customers. It applies to both domestic and cross-border transactions, because the law reaches economic activities outside the UAE that affect competition inside the UAE.

Buyers conducting M&A due diligence in the UAE should assess competition clearance requirements at an early stage. For corporate lawyers advising on financial services transactions, separate CBUAE, SCA, or DFSA/FSRA approvals may also apply in parallel with the competition filing.

The legal framework

UAE competition law has undergone a complete overhaul. The old regime under Federal Law No. 4 of 2012 set only a market share threshold of 40%, produced very few filings, and treated silence from the Ministry as deemed approval. The new framework is structured around three instruments:

• Federal Decree-Law No. 36 of 2023 (the Competition Law), effective 29 December 2023, which replaces the 2012 law and establishes the new merger control framework
• Cabinet Decision No. 3 of 2025, published 30 January 2025, which sets the specific turnover (AED 300 million) and market share (40%) thresholds
• The implementing regulations under Decree No. 37 of 2014, which remain in force pending replacement, governing procedural aspects of the notification process

The Ministry of Economy, through its Competition Department and the Competition Regulation Committee, is the authority responsible for reviewing notifications and issuing decisions.

What counts as an "economic concentration"

The Competition Law defines an economic concentration as any action that results in the full or partial transfer (by merger or acquisition) of ownership or usage rights in property, assets, shares, stocks, or obligations of one establishment to another, where the result is direct or indirect control over the target.

In practice, this captures:

• Share acquisitions (full or partial) that result in a change of control
• Asset purchases that transfer a business or a material part of a business
• Mergers of previously independent entities
• Full-function joint ventures where the JV will operate as an autonomous economic entity
• Possibly minority shareholdings where veto rights or other mechanisms give the acquirer de facto control

The test is whether the transaction gives one party direct or indirect control over another. The Competition Law does not require formal majority ownership. Material veto rights over budget, business plan, or senior management appointments can be enough.

The two filing thresholds

A transaction that qualifies as an economic concentration must be notified to the Ministry if it meets either threshold:

The introduction of a turnover threshold is a significant change. Under the old 2012 law, the only trigger was the 40% market share test, which was hard to calculate and rarely tripped. The AED 300 million turnover test will capture more transactions, particularly in concentrated sectors where a single deal can cross the line.

The "relevant market" definition matters. The Competition Law defines the relevant product market as products or services that are interchangeable by price, characteristics, and intended use. The relevant geographic market is the physical or digital place where supply and demand converge under similar competitive conditions. The narrower the market definition, the more likely a deal crosses a threshold. Parties should expect the Ministry to define markets based on UAE-specific conditions, not global benchmarks.

Notification procedure and timeline

Parties must submit the notification to the Ministry of Economy at least 90 days before the planned closing date. The notification must include information about the parties, the transaction structure, the relevant market, competitive overlaps, and the expected effects on competition in the UAE.

The Ministry then has 90 calendar days from the date the filing is deemed complete to issue a decision. This can be extended by a further 45 days. The clock stops if the Competition Committee requests additional information, and restarts when the parties comply.

Possible outcomes

The Minister of Economy (or an authorised delegate), acting on the recommendation of the Competition Committee, can issue one of four decisions:

Unconditional clearance. The transaction does not adversely affect competition, or its economic benefits outweigh any harm. The parties can close.

Conditional clearance. The transaction is approved subject to remedies. These may include behavioural commitments (pricing, access, non-discrimination) or structural remedies (divestiture of overlapping assets or business lines). The parties must implement the conditions before or after closing, as specified.

Rejection. The transaction would materially harm competition and no remedies can adequately address the concern.

Finding that the thresholds are not met. The Ministry concludes that the notification conditions do not apply. This is functionally a clearance, confirming the parties were not required to file.

If the Ministry fails to issue any decision within the review period (90 days plus any extensions), the transaction is deemed rejected. This is a sharp departure from the old regime. Under the 2012 law, silence meant deemed approval. Under the new law, silence means deemed rejection. Parties cannot rely on bureaucratic delay as an informal clearance mechanism.

Penalties for non-compliance

The Competition Law imposes three distinct penalty categories for merger control violations:

Failure to notify. If a transaction crosses a threshold and the parties close without filing, the fine ranges from 2% to 10% of the parties' combined annual UAE revenue in the preceding financial year. For companies with substantial UAE operations, this can amount to tens of millions of dirhams.

Gun-jumping. If the parties file but close the transaction before receiving clearance, the fine ranges from AED 50,000 to AED 500,000 per violation. This applies to any step that constitutes implementation of the deal before clearance, including transferring operational control, integrating management, or coordinating commercial conduct.

Integration before clearance. Beyond the formal closing, any pre-clearance coordination on pricing, customer allocation, or competitive strategy can constitute gun-jumping. Companies should implement clean team protocols and hold-separate arrangements between signing and clearance.

Exemptions and excluded sectors

The Competition Law does not apply to:

• Small and medium enterprises (as defined in implementing regulations, which remain pending)
• Entities wholly owned or controlled by the federal or local government, or activities carried out by or on the orders of government
• Specific sectors subject to their own regulatory frameworks, including financial services (CBUAE), telecommunications (TDRA), and petroleum and pharmaceutical production and distribution

The sector exemptions require careful analysis. A fintech acquisition, for example, may be subject to CBUAE approval under the Major Acquisitions Regulation and separately to competition clearance if the fintech also operates in a non-financial market. An acquisition in healthcare may trigger both MoHAP or DOH licensing requirements and competition analysis if the combined entity reaches the thresholds.

Companies acquiring businesses in DIFC or ADGM should note that the competition regime applies to UAE market effects regardless of where the parties are incorporated. A DIFC-based fund acquiring a mainland business with AED 300 million in relevant market revenue is subject to the same filing obligation as a mainland acquirer.

How this affects SPA drafting

The new regime has practical consequences for transaction documentation.

Conditions precedent. Any share purchase agreement or merger agreement for a UAE deal that could cross the thresholds should include competition clearance as a condition precedent to closing. This was optional before March 2025. It is now a baseline risk-management provision for mid-market and larger transactions. For guidance on SPA structure and conditions precedent, see our article on share purchase agreements in UAE M&A.

Long-stop dates. The Ministry's review period of up to 135 days (90 plus 45 extension), with potential clock-stops for information requests, means parties should build longer long-stop dates into their transaction agreements. A 6-month long-stop is now prudent for deals that require UAE competition clearance.

Interim operating covenants. Between signing and closing, the target must continue to operate independently. The SPA should include covenants restricting the buyer from exercising control, receiving competitively sensitive information, or making integration decisions before clearance. Clean team arrangements may be necessary for due diligence that involves commercially sensitive data.

Break fees and risk allocation. If the Ministry rejects the transaction or imposes conditions that fundamentally alter the deal's economics, the parties need a clear mechanism for termination. Reverse break fees (payable by the buyer if the deal fails on regulatory grounds) are becoming more common in UAE transactions.

Joint ventures and minority investments

The competition regime does not apply only to full acquisitions. Joint ventures that create a full-function entity are caught if they result in joint control and meet the thresholds. Minority investments may also trigger a filing if the investor acquires de facto control through board seats, veto rights over strategic decisions, or other governance arrangements.

Companies structuring joint ventures in the UAE should assess whether the proposed governance structure constitutes an economic concentration. If the JV will operate autonomously in a market where the parents compete, the Ministry may treat it as a horizontal overlap subject to merger control review.

Cross-border transactions

The Competition Law applies to economic activities outside the UAE that affect competition inside the UAE. A foreign-to-foreign acquisition where both parties generate revenue in the UAE, or where the target has a substantial UAE customer base, may require notification if the UAE-specific thresholds are met.

Parties running multi-jurisdictional merger clearance processes should add the UAE to their filing matrix. The Ministry's timeline is broadly comparable to Phase I reviews in the EU, but the deemed rejection default on expiry creates a risk that does not exist under the EU Merger Regulation.

How should UAE companies prepare for competition clearance in 2026?

The UAE merger control regime is less than a year old in its current form. The Ministry of Economy has not yet published the implementing regulations under the new Competition Law, and the regulations under the old Decree No. 37 of 2014 remain the procedural baseline. There is limited public precedent on how the Ministry defines relevant markets, assesses competitive effects, or applies remedies.

Companies planning acquisitions, mergers, or joint ventures with a UAE dimension should take the following steps:

• Assess notifiability early. At the term sheet or LOI stage, calculate whether the deal could cross either threshold. The turnover test is straightforward if the parties have segmented UAE revenue data. The market share test requires a view on market definition, which may need economic analysis.
• Build competition clearance into the transaction timeline. A 90-day minimum review period, before any extensions, means the regulatory calendar should be mapped before signing.
• Include competition clearance as a condition precedent in the SPA. Closing without clearance is a fineable offence.
• Consider pre-notification dialogue with the Ministry. In jurisdictions with new regimes, informal engagement before filing can reduce the risk of information requests that stop the clock.
• Implement clean team protocols between signing and closing. Any pre-clearance exchange of competitively sensitive information or coordination of commercial decisions is a gun-jumping risk.
• Coordinate with sector-specific regulators. Financial services, healthcare, and telecommunications transactions may require parallel approvals that should be sequenced alongside the competition filing.

Legal advice may be required to assess whether your transaction meets the notification thresholds and how the interaction between the Competition Law, sector-specific licensing rules, and SPA structuring affects your deal timeline.

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