Saudi Competition Law: A Practical Guide to GAC Compliance for Foreign Companies.

Saudi Arabia's Competition Law, originally enacted in 2004 and substantially amended in 2019, governs anti-competitive agreements, abuse of dominance, and merger control in the Kingdom. Enforced by the General Authority for Competition (GAC), the law applies to all commercial activities within Saudi Arabia — including those conducted by foreign entities through MISA-licensed branches, subsidiaries, or joint ventures.

Under Vision 2030, GAC enforcement has intensified significantly. The authority has expanded its investigative capabilities, increased staffing, and adopted a more interventionist approach to merger review. For foreign companies entering the Saudi market — particularly through acquisitions, joint ventures, or distribution agreements — understanding the Competition Law is essential to avoid penalties that can reach SAR 10 million per violation.

**Scope of Application**

The Competition Law applies to every entity engaged in commercial activities in Saudi Arabia, regardless of nationality, legal form, or ownership structure. This includes Saudi-registered companies and branches, foreign companies supplying goods or services to Saudi Arabia, joint ventures and consortium arrangements, distribution and agency agreements, and intellectual property licensing arrangements.

The extra-territorial reach is significant: if an agreement or practice between two foreign entities affects competition in the Saudi market, GAC has jurisdiction to investigate and sanction.

**Anti-Competitive Agreements (Article 5)**

The Competition Law prohibits agreements between competitors (horizontal agreements) and between companies at different levels of the supply chain (vertical agreements) that restrict or distort competition. Specifically prohibited practices include price fixing between competitors — including agreements on resale prices, discounts, or payment terms, market allocation by geography, customer type, or product category, bid rigging in government and private sector tenders, production or supply limitations designed to manipulate prices, and collective boycotts or refusal to deal.

Vertical restrictions are assessed on a case-by-case basis. Exclusive distribution arrangements, territorial restrictions, and selective distribution systems may be permissible if they do not substantially lessen competition — but resale price maintenance is generally prohibited.

**Abuse of Dominance (Article 6)**

A company holding a dominant position in a Saudi market is prohibited from abusing that position. GAC defines dominance as the ability to influence market conditions — typically associated with market shares above 40%, though dominance can be found at lower thresholds depending on market structure.

Prohibited abusive practices include imposing unfair purchase or selling prices, discriminating between customers in comparable transactions without objective justification, tying or bundling products, refusing to deal without justification, creating barriers to entry, and predatory pricing below cost to eliminate competitors.

For foreign companies with strong market positions — particularly in sectors like construction materials, specialised equipment, technology, and professional services — dominance assessments require careful market definition analysis.

**Merger Control**

Since the 2019 amendments, GAC has operated an active merger control regime. Transactions meeting notification thresholds must be notified to GAC before completion.

Notification is mandatory when the combined annual revenues of the merging parties in Saudi Arabia exceed SAR 200 million, or when the combined market share of the merging parties exceeds 40% in any relevant Saudi market.

The review process follows a two-phase structure. Phase I review takes up to 60 business days from complete notification. If GAC identifies competition concerns, Phase II extends the review for an additional 90 business days. GAC may approve the transaction unconditionally, approve with conditions (behavioural or structural remedies), or prohibit the transaction.

For foreign-to-foreign mergers, notification is required if the parties have Saudi operations or supply Saudi customers and meet the thresholds. This captures many international M&A transactions that might not intuitively be considered to have a Saudi competition law dimension.

**GAC Enforcement Powers**

GAC has broad investigative powers including dawn raids on business premises (with judicial authorisation), requests for documents and electronic records, interviews with employees and management, economic analysis of market data, and cooperation with foreign competition authorities.

Penalties for Competition Law violations include fines up to SAR 10 million per violation, disgorgement of profits gained through anti-competitive conduct, publication of the infringement decision, and for individuals, imprisonment of up to two years for cartel offences.

**Compliance Programme Recommendations**

Foreign companies operating in Saudi Arabia should implement competition law compliance programmes covering training for commercial and procurement teams on prohibited practices, review of distribution and agency agreements for competition law compliance, merger control screening procedures for acquisitions and joint ventures, dawn raid response protocols for Saudi offices, document retention policies aligned with GAC requirements, and competition law audit of Saudi operations at least annually.

**Sector-Specific Considerations**

Construction and Infrastructure: Bid rigging in Saudi government tenders is a priority enforcement area for GAC, particularly given the scale of Vision 2030 procurement. Companies participating in giga-project tenders — NEOM, The Line, Jeddah Tower, Red Sea Global — must ensure that any consortium arrangements or subcontracting discussions do not involve competitor coordination.

Telecommunications and Technology: GAC has investigated several technology sector cases and published guidance on digital market competition. Data-driven companies must assess whether their market position creates dominance obligations.

Retail and Consumer Goods: Distribution agreements with territorial restrictions, exclusive dealing provisions, or resale price maintenance clauses may trigger GAC scrutiny — particularly in the food, beverage, and consumer electronics sectors.

GSDA Legal Consultants advises on Saudi Competition Law compliance — including merger control notifications, GAC investigations, compliance programme design, and distribution agreement review.