Competition Law - July 2024

Ensuring Fair Competition: Key Takeaways from the Recent KSA Antitrust Penalties

The General Authority for Competition (“GAC”) in Saudi Arabia recently announced fines totaling SR14.89 million against six companies and establishments operating in the car and goods transport sector. These penalties were imposed for violations of the Competition Law, following an agreement among the companies to increase charges for vehicle transportation, according to a statement released on 5 June 2024.

The fines were distributed as follows:

• SR5 million on MB International Company

• SR5 million on RT Company for Transporting Goods

• SR1.9 million on N.B.A. Corporation

• SR1.5 million on A.A.A.H. Company and T. Transportation Company

• SR790,000 on S.K.S. Company

• SR700,000 on DDN Company

The committee’s decision became final following rulings by the competent court, which rejected the companies' objections to the GAC’s decision. The authority’s Board of Directors authorized an investigation into these violations, subsequently referring the cases to the Committee for Adjudication of Competition Law Violations. The committee issued its decision to impose punitive measures against the involved companies.

Details of the Violations

Competition Law July - 2024 Investigations revealed that the companies violated Paragraph 1 of Article 4 of the Competition Law. This provision prohibits practices, agreements, or contracts between competing establishments, whether written or oral, explicit or implicit, that aim to restrict trade or disrupt competition. Specifically, the law addresses violations involving controlling the prices of goods and services prepared for sale by increasing, decreasing, stabilizing, or any other means that harm legitimate competition.

The companies were found to have agreed to raise transportation charges, an action explicitly prohibited under Paragraph 1 of Article 5 of the Competition Law. The GAC emphasized that the penalties align with its mission and authority to enforce the Competition Law, protect and encourage fair competition, and combat monopolistic practices. This approach also underscores the principle of transparency in procedures following violations of the Competition Law and its executive regulations.

The Role of Compliance Programs

This case highlights the critical importance of robust compliance programs within organizations. Compliance programs play a vital role in ensuring that companies adhere to competition laws and avoid similar violations. Key benefits of compliance programs include:

1- Education and Awareness: Ensuring that employees at all levels understand competition laws and the consequences of non-compliance.

2- Monitoring and Enforcement: Establishing internal mechanisms to monitor business practices and enforce compliance.

3- Risk Prevention: Proactively identifying and mitigating risks associated with potential violations.

4- Transparency and Trust: Maintaining transparency in operations to build trust with regulators and stakeholders.

Call to Action

The General Authority for Competition calls on all establishments to adhere to the Competition Law and its executive regulations. The GAC also encourages companies to review the guidelines on compliance through the “Compliance Portal” available at: https://emtithal.gac.gov.sa.

By implementing effective compliance programs, companies can avoid legal pitfalls, improve market performance, support consumer and business sector confidence, contribute to investment flows, and enhance sustainable development.

Conclusion

The recent GAC fines serve as a reminder of the importance of adhering to competition laws. Companies must prioritize the development and implementation of comprehensive compliance programs to navigate the complexities of competition law successfully. Such programs not only help prevent violations but also foster a competitive, fair, and transparent market environment.