The Board of Directors of the General Authority for Competition issued the anticipated Implementing Regulations to the new Competition Law issued by Royal Decree no. M/75 dated 29/6/1440H (corresponding to 6 March 2019). The New Law and the New Implementing Regulations became effective on 24 September 2019.

The New Law and New Implementing Regulations introduced a number of incremental reforms to the former Competition Law adopted by Royal Decree No. M/25 dated 4/5/1425H (corresponding to 22 June 2004) as amended by the Royal Decree no. M/24 dated 11/4/1435H (corresponding to 12 February 2014) (the Previous Law) and its Implementing Regulations (the Previous Implementing Regulations).

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.

Please click here or the Download Article button to view the full alert.

For further details on the New Competition Law and its practical impact on your operations in Saudi Arabia, please do not hesitate to contact our Saudi Competition team.

Author

David Monnier is a Corporate partner and Head of the Saudi Competition Practice Group of Legal Advisors In Association with Baker McKenzie Limited, based in Riyadh. David advises both Saudi Arabian and foreign clients across a broad range of sectors on international mergers and acquisitions, joint ventures and other strategic corporate transactions.

Author

George Sayen is the Head of the Corporate practice in the Gulf and the Co-Managing Partner of the associated offices in Riyadh and Jeddah. He has been residing in Riyadh and handling Saudi legal matters since 1987, actively advising Saudi Arabian and foreign clients on full range of corporate and commercial law matters including corporate/commercial transactions, major projects, M&A, employment, joint ventures, government contracting and competition law.

Author

Abdulrahman AlAjlan is a partner and Head of the Saudi Litigation Practice Group of Legal Advisors In Association with Baker McKenzie Limited. With 15 years of litigation and commercial experience, he represents clients at the Sharia Courts, the Board of Grievance, the SAMA Committee, Labor Committee, Committee for Negotiable Instruments and all other courts and tribunals. Abdulrahman has extensive arbitration experience, both as an arbitrator and also representing clients in arbitration proceedings.

Write A Comment