Competition Authority approves 32 mergers of exchange companies, centers in Saudi Arabia

Logo of the General Authority for Competition

The General Authority for Competition (GAC) announced its no-objection on the merger of 32 local exchange companies and centers (purchase and sale of foreign exchange).

In a statement obtained by Argaam, the authority said the deal was one of the largest mergers in terms of the number of facilities in a single transaction in its history.

Facilities wishing to merge are seeking to establish a closed joint stock company with the objective of expanding their operations and countering the losses suffered due to the coronavirus pandemic.

The authority reported that it studied the currency exchange market (purchase and sale of foreign exchange) to examine whether the merger would raise competition concerns and concluded that the foreign exchange market is one of the most liquid in the world and is considered one of the most stable markets because of its transparency and therefore the difficulty of manipulating exchange rates.

There were no significant structural or regulatory entry barriers except for licenses required by the sector regulator, which aims to establish a regulatory and supervisory framework for the conduct of exchange work, identify the activities allowed for exchange centers to operate, and protect the rights of clients.

The merger would increase economies of scale and reduce variable costs, thereby contributing to investment in innovation, development and upgrading of the new entity.