Saudi Arabia competition authority blocks first transaction
20 December 2021
In a significant move, Saudi Arabia’s General Authority for Competition has prohibited Delivery Hero’s planned acquisition of rival food delivery app The Chefz.
It is the first time the Authority has blocked a deal under its merger control rules. Saudi Arabia adopted a new competition law, including a merger control regime, in 2019. Since then, it has publicly announced its intervention in only one other transaction – requiring remedies to address concerns over Uber’s purchase of ride sharing app Careem.
We do not yet know the full reasons for the Delivery Hero prohibition. According to a release by the Authority, the parties did not submit the information required to enable it to evaluate potential remedies. This suggests that a conditional clearance may have been possible, but that without the relevant data and materials to assess this, the Authority instead moved to block the deal. We will know more when the Authority publicly releases its full decision.
The development is in any event important. It signals that an increase in merger control enforcement in Saudi Arabia is on the cards. Merging parties should take note that the filing thresholds under the regime are low: a mandatory notification is triggered where the parties’ combined global revenues exceed SAR100 million (approx. EUR24m). The regime is also suspensory, meaning that completion cannot take place before the Authority has issued a clearance, or the statutory deadline of 90 days has passed. In particular, parties to deals with a nexus to Saudi Arabia should consider any potential competition concerns early in the transaction process, and should be prepared for scrutiny.