As part of efforts to strengthen regulatory controls and unify standards, the General Authority for Competition (GAC) has issued the Guideline for Dealing with Vertical and Horizontal Agreements. This step aims to explain the technical and legal standards applied in evaluating agreements and contracts between entities that may impact the market structure or level of competition.
This release is part of GAC’s ongoing efforts to promote fair competition and ensure that entities operating in the Saudi market comply with the Competition Law, issued under Royal Decree No. (M/75) dated 29/6/1440H, and its Implementing Regulations. The guideline aims to balance contractual freedom with market protection requirements. It also reflects a notable advancement in Saudi regulatory infrastructure, showing that the Authority is now adopting a proactive approach, not just post-violation oversight, but also providing preemptive legal tools to support self-compliance.
GAC has invited stakeholders from the trade, investment, and economic sectors, as well as all interested parties, to submit their comments and feedback on the draft guideline via the “Istitlaa” platform between July 24 and August 8, 2024. This invitation reflects GAC’s shift toward a “legislative participation” model, giving the guideline a consensus-driven dimension that reflects actual market needs and stakeholder perspectives.
Legal Foundation and Strategic Objectives
The guideline is grounded in Article (2) of the Competition Law, which outlines three core objectives:
- Protecting and promoting fair competition
- Supporting sustainable economic growth
- Safeguarding consumer rights from monopolistic or collusive practices
This legal foundation indicates that the guideline is not merely interpretive but serves as an executive tool to balance economic efficiency with market fairness. It enables entities to understand the spirit of the law, not just its text, and provides a reference for legal professionals and compliance officers when drafting or reviewing commercial contracts.
Prohibited Restrictions: Defining the Conduct Under Scrutiny
Article (5) lists a non-exhaustive set of practices that are considered prohibited agreements when proven to have the purpose or effect of harming competition, including:
- Setting or suggesting prices or terms of sale and purchase
- Restricting production or distribution of goods, or limiting market flow
- Dividing markets by geography, customers, or time
- Blocking or eliminating market entry for new competitors
- Colluding in bids or coordinating proposals in public tenders
The guideline shows that GAC adopts a flexible understanding of anti-competitive conduct, it does not require a written agreement but monitors observable behavior and market impact. This places a higher burden on entities to self-audit and recognize legal risks embedded in practices that may seem commercial but implicitly restrict competition.
Objective Evaluation of Competitive Behavior: A Three-Part Analytical Approach
The guideline evaluates such agreements using a three-dimensional analytical framework:
- Nature of the restriction: Is it horizontal (between competitors) or vertical (between entities across different supply chain levels)?
- Form of behavior: Is it a per se violation, or does it require impact analysis?
- Market impact: Assessed through variables like price, quality, innovation, ease of market entry, and consumer benefit
This methodology offers companies and legal advisors a reliable self-assessment tool and reduces the likelihood of unintentional violations. It also demonstrates GAC’s capacity to integrate legal and economic analysis into a coherent regulatory approach.
Sharing Sensitive Information: A Fine Line Between Cooperation and Collusion
The guideline highlights that the exchange of sensitive competitive information, especially related to pricing, future plans or financial strategies, is one of the most dangerous forms of horizontal agreements, particularly if it occurs outside a clear regulatory framework. It cites practical examples such as sharing information on prices, production capacity, financial forecasts or upcoming product characteristics.
This level of detail addresses the urgent need to regulate corporate coordination, especially amid growing inter-company collaboration in joint ventures or supply chains. Distinguishing between legitimate cooperation and illegal collusion requires precise legal understanding and clear preventive strategies.
Mitigating Anti-Competitive Effects
To minimize the risks of information exchange, the guideline recommends several compliance measures, including: using aggregated data, reducing frequency of interactions, involving third parties, and establishing internal firewalls. These steps are not business inhibitors, they serve as a compliance shield that allows collaborative operations without breaching legal boundaries.
Adopting such practices becomes the responsibility of internal compliance units and reflects a shift toward a preventive legal culture, not just reactive. It protects entities from potential penalties and preserves corporate reputation in the market.
A Call to Legal Professionals and Regulatory Institutions
This guideline is a golden opportunity for entities and legal practitioners to actively contribute to shaping the regulatory environment for competition. It supports the development of a national model grounded in voluntary compliance, transparency and a balance between commercial interests and public market integrity.
Providing feedback on this guideline is not merely an administrative step, it is a professional duty shared by every lawyer, legal advisor and compliance officer to support Saudi Arabia’s regulatory transformation in competition law and to build a more transparent and efficient national market.