Saudi Arabia's Competition Law prohibits anti-competitive agreements and abuses of dominance and regulates mergers that meet certain thresholds. This guide covers the Competition Authority, prohibited conduct, merger control, vertical agreements (e.g. distribution), and penalties. See commercial agency, contract law, and company amendments.
Overview
The Competition Law aims to protect and promote competition in the market. It prohibits anti-competitive agreements (e.g. price-fixing, market allocation, bid-rigging) and abuse of dominant position. It also establishes merger control: notifiable transactions must be notified to the Competition Authority and may not be completed before clearance (or expiry of the review period). Exemptions and thresholds are set by the law and regulations. Compliance is essential to avoid fines and remedial orders.
Prohibited Conduct
The law typically prohibits: (1) Agreements between competitors that restrict competition — e.g. fixing prices, limiting output, allocating markets or customers, rigging bids; (2) Abuse of dominant position — e.g. predatory pricing, tying, discriminatory treatment, refusal to deal where it harms competition. Some agreements may be exempt if they meet criteria (e.g. efficiency gains, consumer benefit). Avoid any coordination with competitors on pricing, customers, or territories. See commercial agency for vertical (principal–agent) agreements, which are assessed differently.
| Type | Examples |
|---|---|
| Horizontal | Price-fixing, market allocation, bid-rigging |
| Abuse of dominance | Predatory pricing, tying, discrimination |
| Vertical | Assessed for appreciable restriction; some exempt |
Merger Control
Transactions that meet the notification thresholds (e.g. combined market share or turnover) must be notified to the Competition Authority. The parties may not complete the transaction before clearance or before the expiry of the statutory review period. The authority may approve, approve with conditions, or prohibit the merger. Failure to notify can result in fines and possible unwinding. Assess every acquisition, merger, or full-function joint venture against the thresholds and file when required. See company amendments for corporate steps that may accompany a merger.
Vertical Agreements
Agreements between undertakings at different levels of the supply chain (e.g. supplier and distributor) are vertical. Exclusive distribution, selective distribution, and certain resale restrictions may be permissible if they do not appreciably restrict competition. The authority may have guidelines or block exemptions. Ensure your commercial agency or distribution agreements do not contain hardcore restrictions (e.g. resale price maintenance, territorial restrictions that partition the single market where applicable). Take advice for complex or wide-ranging vertical arrangements.
Penalties
Violations of the Competition Law can result in fines (often a percentage of turnover or a fixed amount), remedial orders (e.g. cease and desist, divestiture in merger cases), and in some cases criminal liability. Leniency programs may be available for cartel whistleblowers. Implement compliance training and avoid any conduct that could be construed as coordination with competitors or abuse of dominance.
Competition Compliance Checklist
- Do not agree with competitors on prices, customers, territories, or bids.
- Assess merger control: check thresholds and notify before closing if required.
- Review vertical agreements (agency, distribution) for prohibited clauses; seek guidance if in doubt.
- Avoid abuse of dominance (predatory pricing, tying, discrimination) if you have significant market power.
- Train staff and document compliance; consider legal advice for high-risk conduct or mergers.