Saudi Arabia’s Competition Law, issued in 2019 by Royal Decree No. M/75 and enforced by the General Authority for Competition (GAC), bans anti-competitive agreements, the abuse of a dominant market position, and mergers that close without clearance. It covers any conduct that affects the Saudi market, including deals by foreign companies with no local office, and breaches can cost up to 10% of annual sales.
Foreign investors once treated Saudi antitrust rules as a formality. That is no longer safe. The GAC now reviews hundreds of transactions a year, most of them involving foreign parties, which makes it one of the busiest merger-control regulators in the region. If you are buying a target, setting up a joint venture, or pricing aggressively in a Saudi market, competition rules need to be on the table before you sign.
What does the Competition Law in Saudi Arabia regulate?
Competition Law in Saudi Arabia sets the rules that keep markets fair. The purpose is straightforward: stop companies from rigging the market, whether by teaming up against customers, misusing a strong position, or buying up rivals without approval. The General Authority for Competition enforces it.
The current law came into force in 2019 under Royal Decree No. M/75. It replaced the Kingdom’s first competition law from 2004 and goes further, with tougher rules and wider reach.
The law controls three things:
- Agreements between competitors. Businesses cannot work together to fix prices, share our customers or regions, or rig bids in a tender.
- Abuse of a strong market position. A company that dominates a market cannot use that power to force out rivals or impose unfair terms. Holding a large market share is allowed. Using it to shut out competitors is not.
- Mergers and acquisitions. Bigger deals, which Saudi law calls “economic concentrations,” must be reported to the GAC and cleared before they close.
One point often surprises companies new to the Kingdom. The GAC investigates cases, but it does not judge them. A separate body, the Committee for Review and Adjudication of Competition Law Violations, decides whether a breach happened and sets the penalty. Investigation and judgment stay in different hands.
Does Saudi competition law apply to companies with no office in the Kingdom?
Yes, and this is the feature that catches deal teams off guard most often. Article 3 of the Competition Law says the rules apply even to actions taken outside Saudi Arabia, as long as those actions affect competition inside the Kingdom. In other words, you do not need a Saudi company, a branch, or even a single employee in the country to fall under the law.
For mergers, this has a real consequence. Two foreign companies with no presence in Saudi Arabia may still have to file their deal with the GAC if their sales into the Saudi market are large enough to cross the thresholds. This is common in practice: about half of the deals the GAC reviews each year involve two foreign parties. Selling into the market, on its own, can be enough to bring a global deal under Saudi review.
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So when a multinational lists the countries where it needs merger approval, Saudi Arabia belongs on that list as early as the EU or the other active Gulf regulators.
When must you notify the GAC before closing a deal?
Two conditions trigger a mandatory filing before closing. First, the deal has to be an economic concentration, meaning a change of control through a merger, acquisition, or standalone joint venture. Second, the parties have to cross the GAC’s financial thresholds.
Since a late-2023 reform, those thresholds are cumulative. A filing is generally required only when all three of these are true:
- The combined worldwide annual sales of the parties exceed SAR 200 million;
- The target’s worldwide annual sales exceed SAR 40 million; and
- The combined annual sales of the parties inside Saudi Arabia, the local-nexus leg, exceed SAR 40 million.
Because all three must be met, a large global buyer with only a small Saudi footprint can fall outside the net. That was the aim of the reform: to stop capturing deals with no real connection to the Kingdom.
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Two details catch people out. Both sides carry the filing duty, and the GAC has fined a buyer and a target the same sum for the same failure to notify. Review then takes up to 90 calendar days from a complete filing, with a possible 45-day extension, so that period has to sit inside your signing-to-closing plan.
Where it is unclear whether a deal is caught at all, parties can ask the GAC for informal, non-binding guidance before preparing a full submission.
In practice
A global group signs to buy a foreign target. The target has no Saudi entity but sells into the Kingdom through a distributor. The lack of a local company does not settle the filing question on its own. Before fixing a closing date, the parties should look at turnover, control, and the target’s Saudi sales, and treat competition clearance as a condition precedent rather than a formality bolted on at the end.
What changed under the 2025 merger guidelines?
In April 2025 the GAC issued the fifth edition of its Economic Concentration Review Guidelines. Two changes matter most for foreign investors.
The first broadens the meaning of “control.” The guidelines now separate positive control, the power to direct strategic decisions, from negative control, the power to block them. A minority stake with veto rights over budgets, business plans, or senior appointments can amount to control, and so trigger a filing, without any majority holding. Investors in minority or club deals should look hard at their governance rights.
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The second adds exemptions. The guidelines carve out some joint ventures aimed at markets or products not yet present in Saudi Arabia, and some transactions involving investment funds, where set conditions are met. They are useful but conditional, so check the criteria against the current text rather than assuming an exemption applies.
When is a company “dominant,” and what counts as abuse?
Dominance is not about size alone. The law treats a business, or a group acting in concert, as dominant under either of two tests: a share of at least 40% of the relevant market, or the ability to influence that market by controlling prices, output, or supply. The current law dropped the old requirement that dominance last for twelve months, so it can be assessed at a single point in time.
The second test reaches further than many foreign counsel expect. A firm can be dominant without selling anything directly, as long as it can move the price of a product or service in the market. The same logic can catch a powerful buyer, not only a seller.
Being dominant is lawful. Abusing that position is not. Article 6 lists prohibited conduct, and the list is not exhaustive: selling below total cost to force out rivals or block new entrants, fixing or imposing resale prices or conditions, manipulating quantities to create an artificial shortage or glut, discriminating between customers on equivalent deals, refusing to deal without objective justification, tying an unwanted product to a wanted one, and requiring a counterparty not to deal with a competitor. Market leadership on its own does not create liability; the abusive conduct does.
Which agreements between businesses are illegal?
The law splits prohibited agreements into two groups, and the split matters. Some restraints are anti-competitive on their face, with no need to prove any effect. Price-fixing, bid-rigging in tenders, market or customer allocation, and output limits sit here. Others are judged by their actual or likely effect, which leaves room to defend a restriction genuinely needed to launch a product or open a market.
Form does not matter. A prohibited understanding can be written, verbal, explicit, or simply tacit, so an exchange of future prices, discounts, or tender strategy with a competitor can create risk even without a signed document.
Enforcement here is active and public. In December 2025 the GAC fined thirteen establishments a combined SAR 36.9 million for price-fixing across several sectors. In an earlier and widely reported case, it penalized fourteen supermarkets, a total in the region of EUR 26 million, for abusing their positions by pressuring suppliers into free goods. Both were public decisions naming the companies involved.
In practice
Two suppliers meet at a trade-association event. Their sales managers compare notes on planned price increases and agree the market should “stay disciplined.” Nothing is written down. The exchange can still draw scrutiny, because the rules apply to oral and implicit understandings just as much as to signed contracts.
Can you reduce your exposure? Leniency, settlement, and exemptions
The law also gives companies room to manage risk, and moving early is what makes the difference.
Leniency rewards the first mover. The first company to come forward and hand the GAC evidence against its co-conspirators can obtain leniency. Timing is decisive: a leniency or settlement request can be made before or after the authority opens an investigation, but not once a decision has been taken to start criminal proceedings. The GAC must respond within 120 days of a complete request, and where it grants relief, no case proceeds before the violations committee against that applicant.
Settlement runs alongside, letting the GAC and an alleged violator resolve a matter without a full contest. Exemptions cover the front end: a business can apply to have an agreement, a practice, or a concentration exempted. The authority weighs whether the arrangement improves the market, product quality, or innovation, or delivers consumer benefits that outweigh the harm to competition, and it will not clear anything that removes competition altogether.
What are the penalties, and how are cases decided?
Penalties are heavy and scale with the breach. For core violations, including anti-competitive agreements, abuse of dominance, and unlawful or unmodified concentrations, the law allows a fine of up to 10% of the annual sales connected to the violation, or up to SAR 10 million where those sales cannot be assessed. The deciding committee can instead impose a fine of up to three times the profit gained from the offense, and any fine can double for a repeat breach committed within three years.
Lesser breaches carry lower ceilings. Obstructing an investigation attracts up to 5% of annual turnover, or up to SAR 5 million where turnover cannot be estimated, and other breaches reach up to SAR 2 million. Beyond money, the GAC can order structural remedies such as unwinding an agreement or requiring a divestiture, and final decisions may be published in the press at the offender’s expense.
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The GAC’s investigators do not decide the case. A committee of five board members adjudicates violations, proceedings run in writing, and a decision becomes final unless a party appeals to the competent court within thirty days. Serious matters can escalate to criminal proceedings, and once that step is taken, leniency is no longer available.
Whether a given arrangement crosses the line often depends on how the market is defined and what effect the conduct has, which are questions of evidence and interpretation. Assessing exposure before you act is far safer than doing it after the GAC opens a file.
The practical takeaway
Competition compliance now sits at the center of doing business in the Kingdom. Collusion and abuse of dominance are prohibited, qualifying mergers and joint ventures need clearance before closing, the rules reach foreign parties that sell into the market, and fines can reach a tenth of the relevant sales. For an international investor the exposure is manageable, provided the work happens early: check the thresholds, test your governance rights against the control standard, review pricing and distribution terms before they harden, and remember that leniency and settlement exist if a problem surfaces.
If you are planning an acquisition, structuring a joint venture, or want comfort that your Saudi operations sit on the right side of the GAC’s rules, our Corporate and Competition team can assess your filing obligations and exposure before deadlines and structures are locked in. Getting the analysis right early costs far less than defending a decision later, and it keeps your transaction on schedule. For customized legal consultation, please contact us at info@ahysp.com.
FAQ
It is the legal framework governing anti-competitive agreements, abuse of dominant market positions and qualifying economic concentrations in the Kingdom. The General Authority for Competition administers and enforces the framework.
The General Authority for Competition oversees competition matters, investigates suspected violations and reviews qualifying economic concentrations. Adjudication and appeal procedures apply under the Competition Law and its Implementing Regulations.
Yes. It applies to entities operating in Saudi Arabia and may cover conduct outside the Kingdom where that conduct adversely affects competition in the Saudi market.
Agreements or coordinated conduct that determine or propose prices, service fees or sale and purchase terms may violate Saudi Competition Law. This can include oral or implicit coordination.
A market share of 40% or more may establish dominance under the Implementing Regulations. The GAC may also consider a business dominant where it can influence the relevant market, even when the assessment depends on broader market factors.
An acquisition may require prior notification where it constitutes an economic concentration and meets the applicable financial and Saudi nexus tests. The analysis depends on control, turnover and the parties’ activities.
Certain violations may attract fines of up to 10% of the annual sales value connected to the violation, or up to SAR 10 million where the sales value cannot be estimated. Other corrective and procedural measures may also apply.
