1-1 These procedural rules are interpretative and explanatory of the provisions contained in the Telecommunications System and its executive regulations, as well as the regulatory frameworks issued by the Authority. They aim to implement a clear and transparent mechanism for reviewing merger and acquisition operations submitted to the Authority for approval. 

2-1 The Authority may amend, update, add to, replace, or repeal these procedural rules as it deems appropriate.

3-1 The Authority may exempt any person subject to these procedural rules from the application of any of its provisions, in whole or in part, based on a request received from them or on its own initiative.

4-1 These procedural rules shall come into effect 30 days from the date of their publication.

• 1-2 The terms and words defined in this document shall have the same meanings as those contained in the Authority's regulations, and the following words and expressions shall have the meanings associated with them unless the context requires otherwise:

  • 1-1-2 "Reviewable Transaction" means:

    • a) A merger between a licensed entity in the Kingdom and another service provider inside or outside the Kingdom.

    • b) An acquisition of five percent (5%) or more of the shares or stakes of a licensed service provider operating in the Kingdom.

    • c) An acquisition of a percentage of the shares or stakes of a licensed service provider operating in the Kingdom, resulting in one of the service providers attaining a position of control over a specific telecommunications market.

  •  2-1-2 (Conglomerate Transaction): Means a "Reviewable Transaction" between two parties engaged in business activities in different markets, or activities within the same market that are complementary to each other.

  • 3-1-2 (Joint Venture): A transaction between two parties resulting in the establishment of a third party, whose resources, ownership, revenues, expenses, and management are shared between the two parties to achieve a common goal. Each party typically retains its own identity.

  • 4-1-2 (Horizontal Transaction): Means a "Reviewable Transaction" between two parties engaged in similar businesses in a single market.

  • 5-1-2 (Vertical Transaction): Means a "Reviewable Transaction" between two parties each operating at different stages of producing the same commodity.

  • 6-1-2 Competitive Assessment: Means the analysis of the potential competitive effects of any "Reviewable Transaction".

  • 7-1-2 Entity: Means the entity that is likely to be established as a result of any "Reviewable Transaction" request.

  • 8-1-2 (Coordinated Effects): Means the effects that increase the likelihood or ability of service providers in the market to coordinate their prices or business activities in a non-competitive manner.

  • 9-1-2 (Unilateral Effects): Means the effects that increase the likelihood or ability of a service provider to operate independently and insulated from customers or competitors. 

  • 10-1-2 (Applicant Party): Any party that has submitted a request to the Authority for approval of a "Reviewable Transaction" in accordance with Article Twenty-Five (25) of the Telecommunications Law.

  • 11-1-2 (Regulatory Requirements): The procedures taken by the Authority in accordance with the provisions set forth in Article Thirty-Five (35) of the Implementing Regulation of the Telecommunications Law, aimed at addressing issues affecting competition in the telecommunications sector related to a merger transaction.

  • 12-1-2 (Safe Harbors): Means the condition in which the Authority sees that a request for a "Reviewable Transaction" does not significantly restrict competition in the market.

• 1-3 The Authority's vision focuses on achieving a regulatory framework for the telecommunications and information technology sector that ensures high competitiveness, exceptional service for subscribers, and a stimulating environment for investors. Among the Authority's tasks is to provide a fair regulatory environment based on clarity and transparency; to stimulate competition, protect the public interest, and safeguard the rights of all relevant parties.

• 2-3 According to Article (3) of the Telecommunications Law and Article (29) of the Implementing Regulation of the Telecommunications Law; the Authority must carry out the following tasks and duties related to competition:

  • − Encourage effective and ongoing competition for the benefit of users.

  • − Monitor and prevent practices that may restrict competition.

  • − Review and make decisions regarding mergers submitted between service providers.

• 3-3 The Telecommunications Law and its Implementing Regulation include a mechanism for the Authority's approval of mergers between service providers and certain acquisition processes through the purchase of shares or stakes from service providers. In order to achieve clarity and transparency, this mechanism has been detailed in these procedures.

• 1-4 The transactions subject to review submitted to the Authority shall be as follows:

  • A- A merger between a licensed entity in the Kingdom and another licensed entity or service provider outside the Kingdom.

  • B- Acquisition of five percent (5%) or more of the shares or interests of a licensed service provider operating in the Kingdom.

  • C- Acquisition of a percentage of the shares or interests of a licensed service provider operating in the Kingdom, resulting in one of the service providers gaining control over a specific telecommunications market.

• 2-4 When considering any claim for a reviewable transaction, the Authority will generally assume that the "acquiring party" will control the "acquired party" or a significant share thereof in the following cases:

  • A) Control of the acquiring party over (30%) or more of the shares in the acquired company.

  • B) The ability of the acquiring party, through an agreement or other arrangements, to direct or obstruct the major strategic decisions of the acquired company, which include major strategic decisions such as approving the budget, or the business plan, or appointing senior management, and other strategies.

• 3-4 The Authority may not assume control by the acquiring party if it believes there are reasons justifying the non-assumption, which primarily depends on the evidence provided by the parties to the claim that may include some indicators mentioned in paragraph (4-4).

• 4-4 Based on the specific facts of each case, the Authority may conclude that the acquiring party controls another company or a significant share therein if the acquiring party owns less than (30%) of the shares in the acquired company. To ascertain this, the Authority will consider a range of indicators including:

  • A) The percentage of shares owned by the acquiring party in the acquired company.

  • B) The existence of any voting rights or special veto rights associated with the acquisition of shares.

  • C) The shareholders' stakes in the acquired company, to determine whether the acquiring party is the largest shareholder in that company.

  • D) Whether the acquiring party has the right to appoint its representatives on the board of directors of the acquired company.

  • E) Any financial or legal agreements or arrangements that make the acquired company dependent on the acquiring company.

• 5- 1 Discussions Before Submitting the Claim

  • 5- 1- 1 The Authority may discuss matters related to the submitted process with its Parties before submitting the Claim. Any discussions and opinions provided by the Authority in this context are considered non-binding advice, and these discussions and opinions are conducted on a confidential basis, and may be in oral or written form.

  • 5- 1- 2 Any advice provided by the Authority will depend on the accuracy and quality of the information provided by the Parties involved in the process.

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• 5- 2 The Claim  

  • 5- 2- 1 Subject to other applicable regulations, approval from the Authority must be obtained before executing any reviewable process, and the Authority has the right to exempt the submitted Claim from any of the requirements stated in this document.

  • 5- 2- 2 The Party submitting the Claim must inform the Authority within (5) working days of any preliminary agreement reached in this regard.

  • 5- 2- 3 Notwithstanding the obligation stated in paragraph (5- 2- 2), the Authority will accept a Claim for a reviewable process submitted for its approval before entering into any legally binding agreement among its Parties, provided that the Parties submitting the Claim to the Authority demonstrate their intention to enter into a legally binding agreement among themselves regarding a reviewable process, such as submitting a memorandum of understanding signed by them or a preliminary agreement.

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• 5- 3 Review Procedure Stages:

  • 5- 3- 1 Review Procedure Stages and Timeframe:

    • 5- 3- 1- 1 According to Article (35) of the Implementing Regulation of the Communications Law, upon receiving a Claim for a reviewable process that meets the requirements according to the form stipulated in Appendix (A) of this document, the Authority must complete the preliminary review procedures (the first stage of the review) within (90) ninety days from the date of receiving a complete Claim, and do the following:

      • A) Approve the process unconditionally.

      • B) Approve the process with conditions set to enhance and develop the competitiveness of the telecommunications markets in the Kingdom, which would increase the benefits to telecommunications users in the Kingdom.

      • C) Reject the process.

      • D) Issue a Notice indicating the commencement of an Investigation into the submitted process as per the provisions of the Implementing Regulation.

    • 5- 3- 1- 2 After completing the Investigation stage, the Authority must issue its Decision in accordance with paragraphs ("A", "B", or "C") of the previous paragraph.

    • 5- 3- 1- 3 The adherence to the aforementioned timeframe depends on the Parties submitting the Claim providing all required information in a timely manner.

    • 5- 3- 1- 4 If the Parties submitting the Claim partially or completely fail to provide the required information within the specified timeframe, the Authority may issue a Notice to those Parties stating that the review procedure is suspended from the date of the Notice issued by the Authority. The review procedure is suspended for a period equal to the time between the date of the Notice issued by the Authority and the date on which the Authority receives the required information completely and correctly.

  • 5- 3- 1- 5 The Authority will issue an additional Notice to the Parties submitting the Claim after receiving the required information, informing them of the timeframe during which the review procedures were suspended.

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  • 5- 3- 2 Key Stages in the Procedures:

    • 5- 3- 2- 1 The first stage of the review conducted by the Authority for a Claim for a reviewable process includes the following key pillars:

      • A) Review the Claim.

      • B) Provide comments to the Parties submitting the Claim regarding any issues raised during any informal meeting held with the Authority in this regard.

      • C) Considerations related to potential regulatory requirements such as the accounting separation of the dominant service provider.

      • D) Issue the Decision.

    • 5- 3- 2- 2 If the Investigation stage is initiated, the Authority will follow the same key pillars mentioned above during this stage in addition to conducting consultations with other Parties.

    • 5- 3- 2- 3 If the Authority follows any steps not mentioned above, it will seek to inform the Parties submitting the Claim of its intention to follow such steps in advance and the reasons related to that.

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  • 5- 3- 3 Procedures and Deadlines for Submitting Comments by the Claim Parties:

    • 5- 3- 3- 1 During the first stage, the Authority will invite the Parties submitting the Claim to a non-binding meeting for the Parties, in order to provide their comments.

    • 5- 3- 3- 2 The purpose of the meeting is to ensure that all necessary information is provided to prepare the Authority's report regarding a reviewable process. This meeting may also be used to obtain responses from the Parties submitting the Claim regarding issues raised by any third party, and the Authority is unlikely to suggest holding a special non-binding meeting if it believes that a reviewable process does not raise any competition-related issues.

    • 5- 3- 3- 3 If the Authority decides to initiate the Investigation stage, it may invite the Parties submitting the Claim to another non-binding meeting.

    • 5- 3- 3- 4 Subject to any confidentiality obligations, the Authority may also invite another Party and/or a representative of any other government entity conducting the review with the Authority to a non-binding meeting.

    • 5- 3- 3- 5 The Parties submitting the Claim have the right to provide oral information during the non-binding meetings and/or written reports after those meetings, within a timeframe determined by the Authority, and this information will be taken into account when preparing the final report for the reviewable process.

    • 5- 3- 3- 6 The Parties submitting the Claim must refer to the Authority's regulations to know the documents required to be submitted to it when conducting any review, and to review other provisions related to document submission.

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  • 5- 3- 4 Role of Other Parties

    • 5- 3- 4- 1 During the Investigation stage, the Authority will invite other relevant Parties to provide their comments on any Claim for a reviewable process by issuing a Notice in accordance with the Authority's regulations.

• 5- 4 Regulatory Requirements

  • 5- 4- 1 The Authority may approve a reviewable process with certain regulatory requirements imposed in accordance with the provisions of the Implementing Regulation of the Communications Law, aimed at enhancing and developing open and competitive telecommunications markets in the Kingdom, which would increase the benefits to users of telecommunications services in the Kingdom.

  • 5- 4- 2 The regulatory requirements proposed by the Authority may include the following:

    • A) Structural regulatory requirements (such as divesting certain assets like towers or databases) which are considered one-time measures to adjust the competitive process in the market.

    • B) Behavioral regulatory requirements, which generally include ongoing obligations aimed at modifying or regulating the behavior of the merged entity.

    • C) Any regulatory requirements proposed by the Parties submitting the Notice.

  • 5- 4- 3 If the Parties submitting the Claim wish to propose certain regulatory requirements, they must submit them to the Authority no later than (1) ten days from the date of the informal meeting(s) referred to in paragraph (5- 3- 3) of this document. However, those Parties may submit their proposals at earlier stages of the review process at their discretion, and they may attach them to their initial Claim submitted to the Authority for approval.

  • 5- 4- 4 The Authority will consider the impact of any proposed regulatory requirement on the relevant markets, either by inviting the public to provide their comments or by sending the proposals to competitors and users to obtain their opinions.

  • 5- 4- 5 Before issuing any approval in accordance with paragraph (5- 4- 1) of this document, the Authority will discuss the proposed regulatory requirements with the Parties submitting the Claim in informal meetings.

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• 5- 5 Decision Making

  • 5- 5- 1 The Parties submitting the Claim will be directly notified of the Authority's Decision within the specified statutory periods, which will be published in full or summarized, and in the event that the Authority decides to initiate the second stage of the Investigation, the Authority will issue a brief statement that does not interfere with the ongoing Investigation process.

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• 5- 6 Handling Confidential Information

• The Authority applies the following methodology to the publication of documents or any claim of confidentiality by the Party submitting the Notice, or any third party, for documents related to the reviewable process submitted to the Authority:

  • A) When any Party submits a document to the Authority related to a reviewable process; the Authority has the right to publish a copy of the document or parts thereof on its website unless the submitting Party or the other Party confirms the confidentiality of parts of this document or all of it at the time of submission to the Authority, and the confidentiality of these documents is subject to the applicable regulations in this regard.

  • B) Any Party submitting the Claim, or any third party insisting on claiming confidentiality, must simultaneously provide an additional abbreviated version of the main document after removing the confidential information to enable the Authority to publish it along with the other documents on its website, and if the entire document is confidential, it must provide reasons for not submitting a publishable abbreviated version of it.

• 7- 1 Application Form and Information to be Provided at the Beginning of the Review Process

• (Phase One):

  • 7- 1- 1 Appendix (A) of this document includes the application form that must be submitted to the Authority to initiate Phase One of the review of the claim and obtain approval for a reviewable process submitted in accordance with Article Twenty-Five (25) of the Law. The Authority will commence Phase One of the review upon receipt of the complete application, provided that it includes the official signatures.

  • 7- 1- 2 The application must be accompanied by a declaration stating that the information contained in the claim is true, accurate, and not misleading, in accordance with the provisions of paragraph (7) of the claim.

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• 7- 2 Additional Requirements in Case of Competition Concerns

  • 7- 2- 1 When the Authority determines, as part of its review, that any review process may lead to competition concerns, the party submitting the claim must provide all information requested by the Authority, including but not limited to the following additional information:

    • A) A brief description of the impact of the submitted process on competition.

    • B) Confirmation that the submitted process will not affect the availability of telecommunications and information technology services.

    • C) An assessment of the costs and benefits of the submitted process for the end users of the parties involved.

    • D) Identification of any costs or benefits that may arise from the submitted process and then estimating them.

    • E) A description of the steps that will be taken to ensure the integrity of the network after the completion of the submitted process.

    • F) Details on how to maintain service quality and reliability after the implementation of the submitted process.