The Saudi Competition Law is a young law, enacted in 2004 and amended in 2014. The legal understanding of concepts such as antitrust /competition in Saudi Arabia is still evolving. This article introduces the basic premise and tenets of the Saudi Competition Law to investors, scholars and practitioners. The author also notes whether the Saudi Competition Law acknowledges concepts such as the per se rule and the rule of reason.
The Saudi Competition Law comprises 21 Articles; this paper addresses Articles 1 and 4. Article 1 introduces terms like “fair competition” and “lawful competition.” Without diving too deep into the terminology of Article 1, suffice it to say that this Article lays out the goals and purpose of the Saudi Competition Law. Article 1 states that the Law aims to protect and promote fair competition and to counter monopolistic practices that may affect lawful competition.
Like many competition/antitrust laws currently in place in countries around the world, Article 4 of the Saudi Competition Law prohibits “practices, agreements and contracts among competing entities or those entities that may have the potential to be competing entities…which have the object or the effect of restraining trade or impeding competition.” This part of Article 4 is analogous to Section 1 of the Sherman Act in the US.
Article 4 of the Saudi Competition Law also prohibits an entity with a dominant position in its marketplace from pursuing any practice or action that may impede competition. This part of Article 4 is analogous to Section 2 of the Sherman Act.
Article 6 of the Saudi Competition Law and certain articles of the implementing regulation of the Saudi Competition Law also introduced Saudi Arabia to a new concept of economic concentration request, known in other jurisdictions as a “premerger notification” or a “merger control.” Article 4 stipulates that if certain mergers or acquisitions meet certain conditions that may result in economic concentration, they are required by law to notify the competition authority (e.g., the Competition Council in Saudi Arabia, the Federal Trade Commission and Department of Justice in the US and the Competition and Markets Authority in the UK).
Although the language of the Saudi Competition Law can be understood to introduce the concepts of both the per se rule and the rule of reason, the application of such concepts has not been explicitly or intentionally adopted in Saudi. The Saudi courts have a role to play in the process that mainly focuses on the application of the Saudi Competition Law and its implementing regulation.
In summary, the application and enforcement of the Saudi Competition Law has been more active than before. Therefore, companies, investors and practitioners who participate in the market and commercial activities that this Law regulates must become well versed in its contents and interpretations. Also, they must remain vigilant in consistently tracking developments in the judicial and executive applications of the Saudi Competition Law and its implementing regulation.
DISCLAIMER: this article does not constitute legal advice.