# Competition Law Guide: Prohibited Practices and Economic Concentration

The Competition Law in Saudi Arabia aims to promote a fair investment environment that stimulates innovation and protects consumer and establishment rights. In this article, we discuss the first axis of the Law: **Prohibitions and Economic Concentration**.

## First: Prohibited Practices between Competitors

The Law prohibits any agreements or contracts between competing establishments (whether written or oral) aimed at violating competition, most notably:

- **Price Fixing:** Agreement to raise, lower, or fix prices of goods or services.
- **Market Sharing:** Agreement to divide markets by geographic regions, customers, or seasons.
- **Tender Collusion:** Coordination between applicants in government or private tenders to manipulate prices or award (such as submitting cover bids).
- **Freezing Production:** Agreement to reduce offered quantities to control price.

## Second: Abuse of Dominant Position

The Law does not prevent the existence of a strong establishment in the market, but prohibits **exploiting this power** to harm competitors.

### When is an establishment in a "Dominant Position"?

An establishment (or group) is considered dominant if:

- Its market share reaches **40% or more**.
- Or it possesses the **ability to influence** prevailing prices in the market (even if its share is lower).

### Forms of Prohibited Abuse:

- Selling below cost to drive out competitors (Predatory Pricing).
- Creating artificial shortage in goods to raise prices.
- Imposing arbitrary conditions or refusing dealing without justification.

## Third: Economic Concentration (M&A)

The Law requires establishments wishing to merge or acquire to report to the General Authority for Competition and obtain its prior approval.

### Reporting Conditions:

- **Financial Threshold:** If the total annual sales of all parties exceed **200 Million Riyals**.
- **Deadline:** Must report at least **90 days** before completing the deal.

### Evaluation Process and Decision:

The Authority studies the request within 90 days, considering the deal's impact on competition, consumer interest, and freedom of entry for new competitors. The decision takes one of these forms:

- **Full Approval.**
- **Conditional Approval:** (e.g., selling some assets to ensure no monopoly).
- **Rejection:** If the harm to competition outweighs economic benefits.

> **Important Note:** If the 90-day period passes without a decision from the Authority, this is considered **implicit approval** of the deal.



**Conclusion:**
Establishments must review their commercial policies to ensure non-involvement in restrictive agreements, and adhere to disclosure requirements when entering major merger deals to avoid strict penalties discussed in the next article.