Saudi Arabia Reforms its Competition Law

The most significant changes introduced include the following:

Jurisdiction and Scope

• The New Law explicitly provides that it applies to entities operating in Saudi Arabia (whether or not validly licensed) but also to practices taking place abroad, if such practices produce anti-competitive effects in Saudi Arabia.
• The concept of entities subject to the New Law under the New Implementing Regulations is very broad and encompasses any institutions, companies or groups engaged in an economic activity regardless of their legal form, nationality and ownership. The concept of “economic activities” is defined broadly to include any commercial, agriculture, industrial service and professional activity.
• The New Implementing Regulations also include in the concept of entities subject to the New Law individuals engaged in economic activities (which suggests that individual end-customers may not be exempt from the scope of application of the New Law) and electronic platforms and applications (despite their absence of legal personality so presumably the New Law and the New Implementing Regulations will simply apply to the entities owning and/or operating such websites or digital applications).
• With respect to practices taking place outside Saudi Arabia, the New Implementing Regulations vest the Authority with the power to (i) review behaviors and practices having a potential or existing impact on competition in Saudi Arabia; and (ii) take the necessary measures and procedures, or request the foreign competent authorities to take or implement the same.
• While the Previous Law provided for a broad exemption to public corporations and state-owned entities, the New Law and New Implementing Regulations limit such exemption to public institutions and to wholly state-owned companies solely authorized under a Royal Order, a Royal Decree, a Council of Ministers resolution, or a High Order to provide commodities or services in any given specific field of activity. In this case, the exemption is only granted to such public institutions or wholly state-owned companies with respect to the field of activity for which it has exclusivity.
• The New Law and the New Implementing Regulation apply to entities participating with exempted owned-state companies in activities violating the New Law.
• The New Implementing Regulations also include a supremacy clause giving the Authority jurisdiction to apply the New Law and the New Implementing Regulations to entities operating in a field of activity that is regulated by another governmental body (e.g. pharmaceutical and information technology sectors). The New Implementing Regulations vest the Authority with inherent jurisdiction in case of conflict or overlap of competences with those of other governmental bodies arising from the implementation of the provisions of the New Law.