Implementing Regulations
of Competition Law
Kingdom of Saudi Arabia Council of Competition Protection
السعودية العربية اململكة المنافسة حمایة مجلس
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Competition Protection Council
Resolution No. (13/2006)
Dated 25/11/1427H – 16/12/2006 Resolution No. (35/2008)
Dated 9/9/1429H – 9/9/2008*
Article (1):
Wherever they occur in these Regulations, the following terms shall have the
meanings expressed next to them unless the context requires otherwise:
Law: Competition Law.
Entity: Factory, establishment or company owned by a natural or corporate
person(s), all groupings practicing commercial, agricultural, industrial or any
service activities, or selling and purchasing goods or services.
Market: Place or means where a group of current and prospective vendors
and buyers meet during a specific period of time.
Domination: a situation where an entity or a group of entities has a market
share of at least 40% of total sales for a period of 12 months and/or the entity
or group of entities is in position to influence the prevailing price in the
market.
Merger: Merging an entity with one or more entities, or the merger of two or
more entities into a new one.
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Council: Competition Protection Council.
Ministry: Ministry of Commerce and Industry.
Minister / Chairman of the Council: Minister of Commerce and Industry /
Chairman of Competition Protection Council.
Regulations: Provisions of these Implementing Regulations.
Committee: Committee for Settlement of Violations of Competition Law.
Commodity / Commodities: any commodity or service or a combination
thereof which may, in terms of price, characteristics and uses, substitute each
other to meet a specific consumer need in a given geographical area of
homogenous competition conditions.
Economic Concentration: any act resulting in full or partial transfer of
ownership rights or usufruct of an entity’s properties, rights, stocks, shares or
obligations to another entity that puts an entity or a group of entities in a
position of domination of an entity or a group of entities, by way of merger,
takeover, acquisition, or combining two or more managements into one joint
management or any other means which leads to a state of Economic
Concentration.
Article (2):
The Law and Regulations aim at:
(1) Protecting and promoting fair competition through reasserting market
principles and goods traded therein, as well as free and transparent
pricing.
(2) Combating monopoly or practices affecting fair competition by
commission, emission causing an act violating fair competition.
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Article (3):
(a) The provisions of the Law and the Regulations shall apply to all
entities operating in the Saudi markets and various activities
thereof. They shall also apply to any activity taking place abroad
that leads to consequences contrary to fair competition within the
Kingdom.
(b) The following shall be exempted from the provisions of Paragraph
(a) above:
(1) Any company or establishment fully owned by the state.
(2) Any commodity whose price is fixed pursuant to a resolution
by the Council of Ministers or a provisional decision by the
Minister in response to extraordinary circumstances, an
emergency or a natural disaster.
Article (4): Any practices, alliances or agreements, explicit or implicit, between competing or potentially competing entities which violate, restrict or prevent competition shall be prohibited, particularly those whose subject matter or purpose is as follows:
(1) Fixing prices, service charges or terms of sale, and the like. (2) Setting a limit for production of goods or the rendering of services. (3) Dividing markets on the basis of geographical areas, sale or
purchase quantities, customers or any other basis adversely affecting competition.
(4) Discriminating among clients in prices, facilities and services. (5) Taking measures to hinder the entry of an entity into the market or
forcing it out of the market. (6) Complicity in tenders. Submission of declared joint bids shall not be
considered complicity, provided that the purpose thereof is not to violate competition in any way.
(7) Setting different prices on a certain commodity according to where it is sold.
(8) Selling at less than the cost price in order to force competitors out of the market.
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Article (5):
(1) The Council may exempt from the application of the provisions
of Article (4) above to practices and agreements violating
competition which lead to improvement in performance of
entities and benefit customers to an extent greater than the
effects of restriction of free competition, if the relevant entity or
entities submit the request for exemption in writing along with
supporting justifications.
(2) The Council shall review the request and issue a decision of approval
or refusal, giving the reasons thereof.
(3) The Council may specify in its decision both the exemption term and
conditions. It may thereafter shorten or extend such term.
(4) The Council may, pursuant to a reasoned decision, cancel the
exemption at any time.
(5) The Council shall issue its decisions with respect to exemption request
approval, refusal, determining its term or cancellation thereof in
accordance with “rules governing exemptions” referred to in Article
(23) hereunder.
Article (6):
(1) Any entity of a dominant position in the market is prohibited from
exploiting such a position to violate, limit or prevent competition,
including the following:
(a) Fixing or imposing prices or terms on resale of goods.
(b) Committing any act that leads to hindering the entry of
another entity into the market, forcing it out or exposing it to
losses, including selling at a loss.
(c) Imposing unrealistic price for a commodity through the
dominant entity’s hindering, limiting or refusing the sale or
purchase of a commodity in any other manner.
(d) Contriving a false shortage or abundance of a commodity.
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(e) Importing add-ons to a commodity at prices that force other
competitors out of the market.
(f) Discriminating among clients in similar contracts with respect
to commodity prices, service charges or terms of sale and
purchase thereof.
(g) Compelling a client or agreeing therewith to refrain from
dealing with a competing entity.
(h) Seeking to monopolize certain materials necessary for another
competing entity to practice its activity.
(i) Refusing to deal, without valid reason, with a specific client
under normal commercial terms.
(j) Making the sale of a commodity or offer of a service
contingent on the purchase of another commodity or a
specific quantity thereof or the request of another service.
(2) An entity, dominant or not, may not perform the following:
(a) Any deliberate act or practice carried out by a non-competing
entity leading to violation of fair competition.
(b) Imposing minimum prices for the resale of a commodity
whether directly or indirectly.
(c) Imposing on another party or obtaining therefrom unjustified
special prices or terms of sale or purchase in a manner that
gives it a competitive advantage or inflicts damage thereon.
(d) An entity shall be prohibited from reselling a commodity in its
purchase condition at a price lower than its real purchase
price plus actual expenses, if any, if the intention is to violate
fair competition. Said prohibition shall not include highly
perishable goods and licensed discounts.
Article (7):
(a) Any entity intending to realize Economic Concentration in order to
dominate 40% (forty percent) of a commodity’s total supply in the
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market shall submit a written application with the following
attachments:
(1) Memorandum of Association or Articles of Association of
related entities.
(2) A draft contract or agreement of Economic Concentration.
(3) A list of the main goods dealt in by entities involved in the
process of Economic Concentration, branches of such
entities, quantity and sales of a commodity as well as a
statement of its share in the domestic market.
(4) A report on the consequences of the process of Economic
Concentration, particularly its positive effects on the market.
(5) Financial statements for the last two fiscal years of the
entities involved in the process of Economic Concentration
as well as their branches.
(6) A list of partners in each entity and the percentage of their
share or interest therein.
(7) Any entity intending to realize Economic Concentration
shall enclose with its application a statement of any
obligations or suggestions it deems necessary to minimize
the potential negative effects of the process of Economic
Concentration on the market.
(8) If a representative submits the application, he shall provide
his full particulars. A copy of his power-of-attorney shall be
enclosed and verified against the original.
(9) Payment of one thousand riyals for review of the
application.
(10) Signing and sealing the application by the principal or the
representative.
(11) Submitting the application to the Council sixty days prior to
the specified effectiveness date of the Economic
Concentration.
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(12) The Council may require any additional information or
documents.
(13) The Council shall announce through one or more media
channels, at the expense of the applicant, an abstract of the
Economic Concentration application, and invite all persons
with interest to give their opinions thereon within a period
not exceeding fifteen days from the announcement date.
(b) The entity applying for Economic Concentration may complete the
concentration procedures, if notified of the Council’s approval in
writing, or if not notified of refusal in writing after the elapse of sixty
days from the application date, or that the application is under
review. In all cases, the elapse of ninety days from the application
submission date without the Council notifying the entity in writing
of approval or refusal shall be considered an implicit approval
thereto.
Article (8):
The Council shall be located at the Ministry of Commerce and Industry.
Article (9):
(a) The Council shall consist of a Chairman and eight members as follows:
(1) Minister of Commerce and Industry Chairman
(2) A representative of the Ministry of Commerce and Industry Member
(3) A representative of the Ministry of Finance Member
(4) A representative of the Ministry of Economy and Planning Member
(5) A representative of the General Investment Authority Member
(6) Four experienced and competent members to be nominated by the Minister
(b) The Chairman of the Council shall select a deputy from among Council
members.
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Article (10):
The Council shall periodically convene at least once every three months or
when necessary.
Article (11):
(1) The Council shall have a secretariat chaired by a secretary general of
Grade Fifteen. The Secretary General shall prepare the Council’s
agenda, notify the Council members of the meetings dates and
implement the Council’s decisions.
(2) The Council shall independently determine the powers and authorities
of the Secretary General.
(3) The Secretariat shall include legal and economic experts, specialists
and secretaries to perform the tasks assigned to them.
Article (12):
The Chairman of the Council shall chair the meetings. In his absence, the
meetings shall be chaired by the deputy chairman.
Article (13):
(a) The officers referred to in Article (11) of the Law shall jointly or
severally record all breaches of the provisions of the Law and its
Implementing Regulations.
(b) A suspected entity may not, under the pretext of confidentiality,
withhold any information for any reason whenever the judicial
investigation officers require such information. The judicial
investigation officers and others who obtain such information shall
maintain the confidentiality thereof and protect the same against
unlawful use.
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Article (14):
Any of the officers referred to in the previous Article may perform the
following in order to carry out the task assigned to him:
(a) Access entities suspected of violating the provisions of this Law and
review all documents.
(b) Immediately investigate the violator, if deems appropriate, after
confronting the violator with the violation attributed to him. In all
cases, the violator shall be allowed to present his remarks in writing
and sign them. The same shall be attached with the investigation
report, after recording the violator's name, nationality, capacity, home
and business addresses. All documents shall be referred to the
Committee.
Article (15):
The judicial investigation officers shall carry identification documents, and
produce them to the person in charge of the entity under investigation, prior
to initiating the investigation.
Article (16):
A violator shall rectify his status and end the violation immediately upon
notification thereof. Ending the violation shall not exempt the violator of the
punishments for such violation under the provisions of the Law.
Article (17): (1) The Council shall form a committee called the Committee for Settlement
of Violations of Competition Law. Said committee shall consist of a Chairman and four members, including at least one legal counselor. The Minister shall issue a decision naming the Committee Chairman and the other four members. The Committee may be dissolved and reformed as per the same procedures followed in formation thereof.
(2) One or more prosecutors shall be appointed, pursuant to a decision by the Minister, to plead before the Committee, and litigate before the Board of Grievances.
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Article (18):
(1) The Committee’s Chairman or his deputy shall administer the
Committee's work and divide it between him and the members.
(2) A Committee meeting shall not be valid unless attended by four
committee members, including the Chairman or his deputy. The
Committee decisions shall be issued by majority votes of members
present. In case of a tie, the Chairman shall have the deciding vote.
(3) The parties concerned shall be notified of the date of the session
specified to decide upon the violation at least fifteen days in advance.
The notification shall include a statement of the violation, a summons
for the violator to present his statements and relevant information.
Article (19):
The Committee may complete investigations it deems necessary and conduct
required inspections of the place of the violation. In such a case, the
Committee may, as a whole, perform the inspection or delegate one or more
of its members for such a task, provided that they submit to the Committee a
report on the findings of the inspection.
Article (20):
(1) The Committee shall promptly decide on violations referred thereto.
However, if more than one session is required to review the violation, the
parties concerned who fail to attend a session shall be notified of the date
of the next session.
(2) If the Committee deems that the violation is punishable by
imprisonment, it shall refrain from reviewing it and shall return the same
to the Minister, with a reasoned recommendation. The violation shall be
brought before the Board of Grievances by the prosecutors for review.
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Article (21):
The parties concerned shall be served with a copy of the decision issued
against them. The decision shall state their rights to file a grievance against
the Committee's decisions with the Board of Grievances, within a period not
exceeding sixty days from the date of notifying the convicted party of the
punishment decision in accordance with Article (15) of the Law.
Article (22):
The Chairman of the Council shall approve the decision passed by the
Committee. However, the decision issued by the Committee on the violation
and approved by the Minister shall not be considered final until the period for
filing a grievance with the Board of Grievances expires without filing a
grievance, or after a final decision has been rendered to this effect by the
Board of Grievances, if submitted.
Article (23):
The Council shall issue the governing rules necessary for the implementation
of the provisions of these Regulations, including:
(1) Rules Governing Exceptions and Exemptions.
(2) Rules Governing Dominant Position.
(3) Rules Governing Economic Concentration.
(4) Rules Governing the work of the Judicial Investigation Officers.
(5) Rules Governing the Pleading Procedures Before the Committee for
Settlement of Violations of Competition Law.
Article (24):
The Council may construe and amend, by deletion or addition, the Articles of
the Regulations.
Article (25):
These Regulations shall become effective once the Law is effective.