Exemption from the Competition Law
The Competition Law issued by Royal Decree No. (M/25) dated 04/05/1425H and its Implementing Regulations issued by Council of Competition Resolution No. 126 dated 04/09/1435H gave the COC the power to exempt firms operating in the Saudi Market from application of the Law as follows:
Article (11) of the Implementing Regulations stipulates as follows: "The Council, upon the request of the relevant entities, may exempt from the application of article (4) of the Competition Law and article (4) of the Implementing Regulations thereof any anticompetitive practice and agreement that will lead to the improvement in the performance of entities and realize benefits to the consumer exceeding the impacts of restriction of free competition."
To apply the exemption, the provision of the said Article indicates that the firm must establish that the exemption will result in positive effects for the consumer and improve the performance of firms, which will achieve the interest of the national economy. (This means that the burden of proof is upon the firm requesting the exemption, and the COC shall verify the same and decide on the validity thereof). In addition, the firm requesting the exemption shall submit proof that the application thereof achieves the purpose for which it was granted the exemption by the Law. This would spare the local market any anti-competitive practices that could affect the local prices and the consumer’s welfare.
In addition, Article (12) of the Implementing Regulations of the Competition Law has specified the data and information to be submitted by the exemption applicant as follows:
An exemption applicant shall submit the following to the Council in accordance with Article (11)
1. Fill in an application including the following:
a. The name, register number, nationality, address, and licensed activity of the entity and the capacity of the applicant.
b. Description of the goods or services, subject of the exemption application.
c. Description of the practice, subject of the application.
d. Identifying the relevant market accurately.
e. Restrictions imposed on the relevant commodity or service.
2. Provide the justifications, pros, and cons of the application supported by documents.
3. The information that the Council or the applicant deems necessary.
Article (14) of the Implementing Regulations of the Competition Law gives the COC the right to inquire, investigate and gather information that it deems necessary as follows: "The Council may investigate, study, and gather the information it deems necessary for studying the exemption application by the Secretariat staff or others and may as well notify the relevant parties of the application and hear their relevant opinions."
The aforementioned Article gives the COC the powers required to study the exemption application submitted by the firm.
The COC shall issue a reasoned resolution by approving the exemption application, its duration and conditions or by rejecting it within ninety days from the date of receipt of the application. If the period elapsed without issuance of a resolution by the COC, the application shall be deemed rejected.
The firm may appeal the COC's resolution with regard to the exemption application before the administrative court.