Provisions on Anti-Competitive Practices

There is no doubt that competition is the foundation of trade and industry, a pillar of the national economy, and the core of the market and its continuity. For that reason, most legislations have intervened to protect competition and regulate the market by establishing a clear and well-defined policy. U.S. competition laws are among the oldest and earliest to emerge, even though ancient legal systems addressed the prohibition of monopoly, which is the other side of the coin of competition. Accordingly, the American legislator recognized the necessity of having governing and regulatory laws for the competitive process. The Sherman Act appeared in 1890, and the Clayton Act was issued in 1914 as an amendment to its provisions, being more advanced and more attuned to the economic reality (1). The Kingdom of Saudi Arabia has likewise given competition significant attention and issued the new Competition Law (2) with the aim of protecting and encouraging fair competition and combating monopolistic practices that affect lawful competition or the interests of consumers, thereby improving the market environment and developing the economy (3). The Saudi Competition Law, through its Council or Authority, constitutes one of the pillars upon which commerce in Saudi Arabia is built, as is the case with competition bodies in developed countries, for several reasons:

 

First: the Saudi Competition Law serves as a safeguard for a vast number of establishments and market participants, ensuring that emerging companies are afforded fair opportunities for investment in order to strengthen competition among existing companies.

Second: the clarity of the Saudi Competition Law on the one hand, and the strength of its enforcement on the other, provides confidence to a large number of foreign investors to enter the Saudi market (4).

 

Accordingly, the Competition Law contributes to the creation of a fair competitive environment in a manner consistent with achieving the objectives of Saudi Vision 2030.

 

While freedom of competition requires opening the field to economic operators and establishments to conduct economic activity and removing restrictions, excessive freedom will lead to adverse outcomes, particularly as some dominant establishments may act abusively, whether by excluding other competitors or restricting or distorting the fundamental purpose of competition. For that reason, it was incumbent upon the regulator to confront such practices by establishing an effective mechanism to protect competition through the enactment of provisions that govern and discipline it (5).

• Prohibition of practices, agreements, and contracts between establishments aimed at undermining competition:

 

Article Four of the Competition Law provides that: “The prices of goods and services shall be in accordance with market rules and the principles of free competition, except for the prices of goods and services that are determined pursuant to a decision of the Council of Ministers, or under a Law.”

 

It prohibited practices, including agreements or contracts between establishments, whether written or oral, express or implied, if their objective or effect is to undermine competition, in particular the following:

 

1. Fixing or proposing the prices of goods, service fees, and the terms of sale or purchase, and matters of similar effect.
2. Determining the sizes, weights, or quantities of production of goods or the performance of services.
3. Restricting the freedom of goods and services to flow into markets, or removing them therefrom wholly or partially; by concealing them, stockpiling them without lawful justification, or refraining from dealing in them.
4. Any conduct that leads to obstructing an establishment’s entry into the market or excluding it therefrom.
5. Withholding goods and services available in the market, wholly or partially, from a specific establishment or establishments.
6. Dividing markets for the sale or purchase of goods and services, or allocating them according to any criterion, in particular the following criteria:

1. geographic areas.
2. distribution centers.
3. type of customers.
4. seasons and time periods.

1. Suspending manufacturing, development, distribution, marketing, and all other forms of investment, or limiting any of the foregoing.
2. Collusion or coordination in bids or offers in auctions and government tenders and competitions, or otherwise, in a manner that undermines competition (6). It shall not be deemed collusion to submit joint bids where the parties disclose such arrangement from the outset and where the nature of the project so requires, provided that the purpose or effect thereof is not to undermine competition (7).

 

For the purposes of the aforementioned Article, an “Establishment” means: “Any natural or juristic person that engages in an economic activity” (8).

 

• Prohibition on exploiting a dominant position in the market to undermine or limit competition:

 

A “dominant position” is defined in Article One of the Competition Law as: “A position through which an establishment, or a group of establishments, controls a specified percentage of the market in which it carries on its activity, or is able to influence it, or both, and such percentage shall be determined by the Implementing Regulations in accordance with criteria approved by the Council.”

Dominance in the relevant market is established by either of the following two criteria:

1. Attaining a market share of 40% or more, whether by one establishment or more.
2. The ability to influence the relevant market by controlling prices, production, or supply.

 

A position of dominance is, in principle, a right available to any economic operator that distinguishes itself in the market by virtue of the commercial reputation achieved by its products or services (9). However, the abusive exploitation of that position to undermine lawful competition is what the regulator prohibited in Article Six of the Competition Law, which provides: “It is prohibited for an establishment or establishments enjoying a dominant position in the market or a significant part thereof to abuse such position to undermine or limit competition, including the following:

 

1. 1. Selling a good or service at a price below total cost in order to drive establishments out of the market, expose them to substantial losses, or impede the entry of potential establishments.

• Setting, or imposing, prices or conditions for the resale of goods or services.

• Reducing or increasing the available quantities of products for the purpose of controlling prices and creating an artificial surplus or shortage.

• Discriminating in dealings between establishments under similar contracts with respect to the prices of goods, service fees, or the terms of their sale and purchase.

• Refusing to deal with another establishment without an objective reason, for the purpose of restricting its entry into the market.

• Requiring an establishment to refrain from dealing with another establishment.

• Making the sale of a good or the provision of a service conditional upon assuming obligations, or accepting goods or services which, by their nature or under commercial usage, are not related to the good or service that is the subject of the original contract or transaction.”

 

• Obligation to notify of economic concentration and its conditions:

 

Article 7 of the Competition Law requires that: “Establishments wishing to participate in an economic concentration process shall notify the Authority at least (ninety) days prior to completing it, if the total annual sales value of the establishments wishing to participate in the economic concentration exceeds an amount to be determined by the Implementing Regulations.”

 

For these purposes, “economic concentration” means: “Any act that results in the total or partial transfer of ownership of assets, rights, shares, equity interests, or obligations of an establishment to another establishment, or the combination of two or more administrations under joint management, in accordance with the controls and criteria set out in the Implementing Regulations.” The Implementing Regulations of the Competition Law set out the conditions and thresholds for notification and the procedures to be followed, in Articles (2-25).

 

• Sanctions prescribed by the regulator in the event of undermining competition:

 

Article 19 of the Competition Law provides as follows: “1- Without prejudice to the provisions of Article (Twenty-Four) of the Law, any person who violates any provision of Articles (Five, Six, Seven, and Eleven) of this Law shall be punished by a fine not exceeding (10%) of the total annual sales value attributable to the violation, or not exceeding (ten million) riyals where it is impossible to estimate annual sales. In cases it deems appropriate, the Committee may, in lieu thereof, impose a fine not exceeding three times the gains realized by the violator as a result of the violation. 2- Without prejudice to any more severe penalty provided for in this Law or any other law, and without prejudice to paragraph (1) of this Article, any person who violates any provision of Article (Sixteen) of the Law shall be punished by a fine not exceeding (5%) of the total annual sales value, or not exceeding (five million) riyals where it is impossible to estimate annual sales. 3- If the violator reoffends by committing the same violation, the Committee may double the fine imposed the first time. A violator shall be deemed a reoffender if it commits the same violation before the lapse of (three) years from the date of issuance of the decision regarding the first violation. 4- The decision issued in respect of the violations set out in this Article shall be published at the violator’s expense in a local newspaper issued in the place of its residence, or through any other appropriate media outlet, provided that publication shall occur after the judgment has become final and unappealable, or after the decision has become final. 5- The Council shall issue a decision specifying the cases in which publication referred to in paragraph (4) of this Article shall be discretionary, and the Implementing Regulations shall determine the controls to be observed in such decision.”

 

The Implementing Regulations of the Competition Law have set out the controls relating to the assessment of penalties, the extent to which publication of decisions relating to sanctions is mandatory, and other controls, in Chapter Seven, Articles (45:53).

 

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Sources:

Saleh bin Hamad Al-Rashdi, The Most Important Rules and Provisions of U.S. Competition Law and Its Applications, a paper published in the Kuwait International Law School Journal, Year 8, Special Supplement, Issue 4, Part 2, Jumada al-Awwal and Jumada al-Akhirah 1441H / January 2020, p. 253, on the file Dr-Hamouda-Fathy-and-Dr.-Saleh-Al-Barashidi.pdf.

The Competition Law issued pursuant to Royal Decree No. (M/75) dated 29/6/1440H.

3- Article Two of the Competition Law issued pursuant to Royal Decree No. (M/75) dated 29/6/1440H.

4- Dr. Mulhim bin Hamad Al-Mulhim, The Saudi Competition Law and Vision 2030, an article published in Al-Eqtisadiah, dated 6/7/2017, on the website “The Saudi Competition Law” and “Vision 2030”.

5- Qasdi Souraya, Prohibiting Abusive Practices Harmful to Competition as an Effective Legal Mechanism to Protect the Market, published on the file al-mudakhalat.pdf, access date 14/12/2025 at 6:15.

6- Article 5 of the Competition Law issued pursuant to Royal Decree No. (M/75) dated 29/6/1440H.

7- Article 8 of the Implementing Regulations of the Competition Law issued pursuant to the decision of the Board of Directors of the General Authority for Competition No. 337 dated 25/1/1441H, for the Competition Law issued pursuant to Royal Decree No. (M/75) dated 29/6/1440H.

8- Article One of the Competition Law issued pursuant to Royal Decree No. (M/75) dated 29/6/1440H.

9- A. Bin Wattas Iman, Economic Aid and Abuse of a Dominant Position as a Restrictive Competition Practice, a paper published on the website: Economic Aid and Abuse of a Dominant Position as a Restrictive Competition Practice | ASJP, access date 15/12/2025 at 2:14 p.m.