The General Authority for Competition (the “Authority“) recently published its latest annual report regarding its activity in 2021. This report shows that since the introduction of the current Competition Law1 (the “Law“) in Saudi Arabia in September 2019, the Authority has strengthened its resources and taken a number of initiatives to raise awareness about the Law and that it has significantly increased its enforcement against violators.
This alert offers an overview of the key initiatives and activities carried out by the Authority in 2021.
Merger Control in Numbers
The Law introduced a broad merger control regime in the Kingdom, capturing a wide range of transactions, from M&A transactions to the formation of full-function joint-ventures. While there was initially some uncertainty about the requirement to notify the Authority shortly after the Law was enacted, a number of domestic and international market players decided to notify their reportable transactions in 2021. The following statistics clearly evidence this trend:
- There was a significant increase in the number of merger control applications submitted to the Authority in 2021 (295 filings) compared to 2020 (137 filings).
- The applications in 2021 included 150 full merger control filings (i.e. requests for a No-Objection certificate) and 128 short form filings (i.e. requests for a No-Notification Required certificate).
- Out of the 150 full merger control filings, 79% were related to acquisitions, 12% to mergers and 9% to joint ventures.
- These applications were submitted by companies operating in the following top five sectors: including manufacturing, wholesale and retail, information and communication, finance and insurance, and professional, scientific and technical services.
- According to the Authority’s social media channels, the total number of merger control applications at the end of the third quarter of 2022 is approximately 227.
Complaints & Investigations
The number of complaints received by the Authority in 2021 increased by 112%, from 64 in 2020 to 136 complaints in 2021. This is likely the result of the Authority’s initiatives aiming at raising awareness about the importance of competition compliance in the Kingdom, as well as its increasing enforcement against violators.
- 44.4% of the complaints received in 2021 related to the wholesale and retail trade sector.
- In almost every case following a complaint (93.5%), the Authority initiated a preliminary study of the situation.
- Overall in 2021, the Authority conducted 31 investigations which involved a total of 150 companies, 52 of which were indicted by the Authority.
- The Authority carried out 257 dawn raids in 2021, representing a 133% increase in comparison to 2020.
- The total amount of fines imposed by the Authority and local courts in 2021 amounted to SAR 189,730,000 (approximately USD 50,594,667) in relation to violations of the Law.
- The fines were imposed on companies active in the following top 5 industries:
- It is worth noting that the Authority has recently started taking enforcement actions against foreign companies as well as local entities.
Additional initiatives taken by the Authority
- In 2021, the Authority developed and approved its 2022-2025 strategy, which includes the following:
- the development of the National Competition Policy, which aims to define and determine the principles, set legislation and general policies that establish the principle of competition that can be adopted to reform local market structures and regulate competitive behavior in such markets;
- the launch of the “Compliance Awards”, which aims at incentivizing companies to comply with the Law and its implementing regulations;
- the preparation and publication of Compliance Guidelines; and
- the promotion of leniency and settlement programs, which are designed to allow violating companies to benefit from reduced penalties and avoid publicity.
- The Authority collaborated with a number of international competition authorities in 2021, including the Egyptian, Brazilian and Australian competition authorities. The collaboration aimed to promote and improve competition, in addition to exchange expertise and contribute to the development of the regional and international competition policies.
- Locally, the Authority partnered with several government agencies to promote and protect competition in the Kingdom. Examples include collaboration with the Saudi Food and Drug Authority and the National Center for Waste Management.
1 Competition Law issued by Royal Decree no. M/75 dated 29/6/1440H (corresponding to 6 March 2019) and its Implementing Regulations issued by a resolution of the Board of Directors of the Authority on 25/1/1441H (corresponding to 24 September 2019).