Competition Law

In harmony with the economic policy built on the principle of competition followed by the Kingdom of Saudi Arabia and the great developments in the economic field. And wishing to enhance and ensure the competition climate in the business sector, the Royal decree No. (M/25) dated 4/5/1425H was issued to approve the competition law. This law aims at protecting and promoting fair competition and fighting monopolistic practices affecting the legitimate competition.

The following articles contain the competition law:
  • 1
    This Law aims to protect and encourage fair competition and combat monopolistic practices that affect lawful competition.

  • 2
    Whenever they occur in this Law, the following terms shall have the meanings expressed next to them unless the context indicates otherwise:
    Firm : Factory, corporation or company owned by natural or corporate person(s), and all groupings practicing commercial, agricultural, industrial or service activities, or selling and purchasing commodities or services.
    Market :Place or means where a group of current and prospective buyers and venders meet during a specific period of time.
    Domination : A situation where a firm or a group of firms are able to influence the market prevailing price through controlling a certain percentage of the total supply of a commodity or service in the industry of its business. The Regulations shall specify this percentage according to criteria which include the market structure, the easiness of market entry by other firms, and any other criteria determined by the Council.
    Merger :Amalgamating a firm with another or the amalgamation of two or more firms into a new one.
    Council :Council of Competition Protection.
    Ministry : Ministry of Commerce and Industry.
    Regulations :Implementing Regulations of this Law.

  • 3
    Provisions of this Law shall apply to all firms working in Saudi markets except public corporations and wholly-owned state companies.
  • 4
    Practices, agreements or contracts among current or potential competing firms, whether the contracts are written or verbal, expressed or implied shall be prohibited, if the objective of such practices, agreements or contracts, or consequent impact thereof is the restriction of commerce or violation of competition among firms. A firm or firms enjoying a dominant status shall also be banned from carrying out any practice which restricts competition among firms, in accordance with the conditions and rules specified in the Regulations, especially the following:

    1.Controlling prices of commodities and services meant for sale by increasing, decreasing, fixing their prices or in any other manner detrimental to lawful competition.

    2.Restricting freedom of flow of commodities and services to markets or removing them, wholly or partially, there from by hiding, unlawfully storing, or refraining from dealing in them.

    3.Contriving a sudden abundance of commodities and services which results in an unrealistic price affecting other dealers in the market.

    4.Preventing any firm from exercising its right to enter or move out of the market at any time or hampering the same.

    5.Depriving, wholly or partially, certain firm or firms of commodities and services available in the market.

    6.Dividing or allocating markets for selling or purchasing commodities and services pursuant to any of the following criteria:

    a. Geographical regions.

    b. Distribution centers.

    c. Type of clients.

    d. Seasons and time periods.

    7.Influencing the normal price of sale, purchase, or supply quotations of commodities and services whether in government or non-government bids or auctions.

    8.Freezing or restricting manufacturing, development, distribution or marketing processes and all other aspects of investment, or restricting the same.

    The Council may choose not to apply provisions of this Article to practices and agreements in violation of competition which are believed to improve the performance of firms and realize a benefit for the consumer exceeding the effects of restricting freedom of competition, as specified by the conditions and rules in the Regulations.

  • 5
    A firm enjoying a dominant status shall be banned from any practice restricting competition, as specified by the Regulations, including:

    1. Selling a commodity or service at a price below cost, with the intention of forcing competitors out of the market.

    2. Imposing restrictions on the supply of a commodity or service, with the intention of creating an artificial shortage in its availability in order to raise prices.

    3. Imposing special conditions on selling and purchasing transactions or on dealing with another firm, in a manner that puts it in a weak competitive position compared to other competing firms.

    4. Refusing to deal with another firm without justification in order to restrict its entry into the market.

  • 6

    1. Firms involved in merger operations or firms desiring to acquire assets, proprietary rights, usufructs or shares, which causes them to be in a dominating position, shall notify the Council in writing at least sixty days prior to completion of the same.

    2. Competing firms desiring to combine two or more managements into one joint management shall, if that results in a dominant status, notify the Council in writing at least sixty days prior to completion of the same.

    3. The Regulations shall specify times of such notification, its form and content, information and documents required, procedures to be followed in submitting it as well as the due fees for the inspection thereof.

    4. The Council may review all necessary information prior to issuing a decision of approval or rejection of the notification submitted thereto, in accordance with the provisions of paragraphs (1) and (2) above, giving justification in each case.

  • 7
    The firm referred to in Article Six of this Law may complete the procedures of merger, acquisition or combining two or more managements into one joint management in the following cases:

    1. Upon notification in writing of the approval by the Council.

    2. Upon expiration of sixty days from the date of notification without being notified by the Council in writing of its objection to the deal or of that it is under study and investigation.

    3. Upon expiration of ninety days from the date of notification with the deal being under review and investigation, without being notified by the Council in writing of its approval or rejection.

  • 8

    1. An independent council named “Competition Protection Council” shall be established. It shall be located in the Ministry of Commerce and Industry.

    2. A Royal Order shall be issued for the formation of the Council as follows:

    The Minister of Commerce and Industry                                                          Chairman

    A representative of the Ministry of Commerce and Industry       Member

    A representative of the Ministry of Finance                                                  Member

    A representative of the Ministry of Economy & Planning                Member

    A representative of the General Investment Authority                      Member

    Four members of expertise and competence selected for their merits and nominated by the Minister.

    3. The term of membership in the Council shall be four years renewable for one term. The Council member shall remain in his post upon expiration of his term until a successor is appointed.

    4. The Council shall convene headed by the chairman or whomever he deputizes of the members and with the attendance of two thirds of the members. Council’s decisions shall be taken by majority vote, and in case of equal votes, the chairman shall have the casting vote

    5. Council members may not disclose any information they obtain as a result of their membership in the Council.

    6. A Council member may not participate in the deliberation of any case or subject matter in which he has an interest or with which he has a relation, or if he is related by blood or marriage to any of the parties involved, or if he has represented any of the parties concerned.

  • 9

    Subject to provisions of other laws, the Council shall have jurisdiction over the following tasks:

    1. Approving cases of merger, acquisition, or combining two managements or more into one joint management resulting in a dominant position in the market.

    2. Ordering the undertaking of proceedings of inquiry, research and collection of evidence pertaining to complaints and practices in violation of provisions of this Law, and ordering the investigation and prosecution thereof.

    3. Approving the initiation of criminal case procedures against violators of provisions of this Law.

    4. Forming the Council’s bodies and issuing the financial and administrative regulations, in coordination with the Ministry of Finance and the Ministry of Civil Service.

    5. Proposing relevant draft laws that affect competition in light of the variables occurring in the market, and proposing necessary amendments to provisions of this Law.

    6. Issuing the Implementing Regulations of this Law.

    7. Preparing an annual report of the Council’s activities and future plans, to be submitted to the Council of Ministers by the chairman of the Council.

  • 10
    The Council shall have a general secretariat presided over by a secretary general of the Fifteenth Grade. The Council shall be provided with all necessary facilities and specialized experts.
  • 11

    1. The Council shall issue a decision designating the employees who shall have the judicial control capacity in implementing the provisions of this Law.

    2. Subject to provisions of other laws, the employees having the capacity of judicial control may: 

    a. Review complaints submitted to them which are based on actual evidence in accordance with the provisions of this Law, investigate them, and prosecute when reviewing violations of provisions of this Law before the committee referred to in Article Fifteen and before the Board of Grievances.

    b. Review all records, files and documents of the firms concerned which are relevant to the complaint in question and obtain photocopies thereof. The firm subject of the complaint may not conceal any information on the pretext of confidentiality or for any other reason.

    3. The Minister may issue a decision assigning some of the Ministry’s staff to perform the Council’s technical, financial, and administrative functions.

    4. The Council may, when needed, seek the assistance of experts and qualified persons from outside the Ministry.

    5. Council Members and staff shall maintain the confidentiality of the information and records they obtain from firms in the process of collecting evidence or investigations, and they may not turn over the same to any other party except with the approval of the Council.

  • 12
    Without prejudice to any harsher punishment provided by any other law, and without prejudice to the provisions of article (13) hereof, each violation of the provisions of this Law shall be subject to a fine not exceeding 10% of the total turnover or not exceeding ten million Saudi Riyals. In case of recurrence, the fine shall be multiplied. If the violation is being continued after the issuance of the decision or the judgment, the Council may suspend the activity of the undertaking tentatively for a period not exceeding one month or revoke the license permanently. The judgment shall be published at the expense of the violator and in all cases the violator, subject to article (18) of this Law, shall reimburse all profits achieved as a resulted of the violation.
  • 13
    Any person disclosing a secret related to his job shall be punished according to provisions of paragraph (5) of Article Eleven of this Law. Anyone realizing a benefit directly or indirectly shall be subject to a fine not exceeding five million riyals or imprisonment for a period not exceeding two years or to both of them.
  • 14
    Punishments referred to in Articles Twelve and Thirteen shall be determined on a case by case basis according to the violation committed and the gravity thereof.
  • 15

    1.The Council shall form a committee of five members one of whom at least shall be a legal counselor, and the Minister shall issue a decision to this effect. The said committee shall have jurisdiction to review and decide violations subject to fines.

    2.The decisions of the committee for imposing fines or suspending the activity tentatively shall enter into force as of the date of its issuance unless the Board of Grievances decides to stop the execution of the decision of the committee in this concern.

    3.Decisions of the committee may be appealed before the Board of Grievances within fifteen days as of the date of notification of the decision. In case of repealing the decision of the committee, the Board of Grievances shall review the violation and impose the relevant penalty.

    4.The Board of Grievances shall be competent to review the violation mentioned in article (13) of this Law and impose the penalties stipulated therein.

  • 16

    Without prejudice to provisions of Article Twelve of this Law, the Council may issue a decision to take one or more of the following measures, if a violation of one of the provisions of this Law has been established:

    1. Requiring the violator to change his arrangements and remove the violation within a period of time specified by the Regulations.

    2. Requiring the violator to dispose of some of the assets, shares or proprietary rights, or to undertake any other action which removes the effects of the violation.

    3. Compelling the violator to pay a daily fine not less than one thousand riyals and not exceeding ten thousand riyals, until the violation is removed.

  • 17
    Anyone against whom the Council has issued a decision may appeal that decision in accordance with the Law of the Board of Grievances and its regulations.
  • 18
    Any natural or corporate person subjected to harm resulting from practices prohibited under provisions of this Law may apply for compensation before the competent judiciary.
  • 19
    Any natural or corporate person subjected to harm resulting from practices prohibited under provisions of this Law may apply for compensation before the competent judiciary.
  • 20
    The Council shall issue the Implementing Regulations of this Law within ninety days from its publication, and they shall come into effect at the time this Law goes into effect.
  • 21
    This Law shall be published in the Official Gazette, and shall take effect after one hundred and eighty days from the date of its publication, with the exception of the provisions related to the formation of the Council and its jurisdiction, which shall be effective from the date of publication of this Law.