Establishing a Comprehensive Competitive System in the Context of Saudi Arabia’s Economic Transformation.

The Kingdom of Saudi Arabia is undergoing an unprecedented economic transformation driven by Vision 2030, which seeks to diversify revenue sources, enhance the national economy’s competitiveness, and foster a more dynamic and attractive business environment. At the core of this transformation, the Saudi Competition System and the Economic Concentration Review Guidelines serve as pivotal regulatory instruments, aligning with these ambitious objectives. These frameworks are not merely conventional regulatory tools but represent a comprehensive conceptual and methodological approach to balancing market freedom with safeguarding fair competition mechanisms.

The philosophy underpinning the Competition System stems from a firm conviction that a prosperous economy can only thrive within a fair and open market environment, ensuring equal growth opportunities for all participants—large and small alike. In this context, the system regulates interactions among economic entities, prevents monopolistic practices, and enhances market efficiency. Meanwhile, the Economic Concentration Review Guidelines act as the system’s operational extension, providing a practical framework that clarifies rules, evaluation criteria, and intervention mechanisms—ensuring decisions are grounded in transparent principles and robust methodologies.

The significance of this regulatory model lies in its ability to harmonize Saudi Arabia’s unique economic characteristics with global best practices, particularly in a rapidly evolving market landscape marked by the rise of cross-border digital economies. Rather than merely addressing violations reactively, the system and guidelines adopt a proactive stance, emphasizing awareness-building, guidance mechanisms, and streamlined procedures. This approach encourages voluntary compliance with competitive rules, reducing the need for punitive interventions.

Within the broader scope of Vision 2030, this system integrates with strategic goals to empower small and medium-sized enterprises (SMEs), spur innovation, and broaden economic participation. These efforts collectively strengthen the investment climate, improve operational efficiency, and embed governance and transparency across commercial activities.

Thus, the Saudi Competition System, supported by its Economic Concentration Review Guidelines, transcends its role as a legal instrument, emerging as a strategic enabler of sustainable competitive growth.

From Legislation to Practical Application – An Integrated Journey Toward a Sustainable Competitive Economy.

Foundational Stage (2004 – 2017): The Beginning of Competitive Awareness.

The Kingdom of Saudi Arabia began its journey to regulate the market and achieve commercial fairness by issuing its first competition law in 2004. This law marked a significant foundational step in the country’s economic transformation, being the first Saudi legislation to establish a legal framework to regulate market behavior and prevent anti-competitive practices. The system’s initial focus was on prohibiting cartel agreements between companies, banning the abuse of dominant market positions, and limiting restrictive practices that harm fair competition.

In addition to the legal framework, the General Authority for Competition was established as an independent regulatory body to enforce the law, with powers to investigate, monitor, and impose penalties when necessary. However, this phase was not without challenges, notably limited awareness of competition concepts within the private sector, difficulties in aligning these concepts with the nature of the Saudi market at that time, and a shortage of local expertise in this field.

Strategic Transformation Stage (2019 – 2022): Alignment with Vision 2030.

With the launch of Saudi Vision 2030, it became essential to update the legislative framework to align with growth and economic openness goals. Thus, the new competition law was introduced in 2019, expanding its scope to cover all economic entities, regardless of their legal form, including foreign companies operating in the local market.

Substantial changes were made, including granting the Authority the power to intervene in economic concentrations resulting from mergers and acquisitions and review them from the perspective of their potential impact on competition. Deterrent measures were enhanced by increasing fines to 10% of the total sales for non-compliant entities and expanding the Authority’s powers to investigate and intervene proactively.

In terms of governance, the Authority underwent an institutional transformation by adopting transparent decision-making standards and establishing specialized technical committees, which strengthened its independence and credibility with investors and the public.

Practical Maturity Stage (2023 – Present): The Guidelines as an Executive Model.

These transformations culminated in the issuance of the Economic Concentration Review Guidelines, which represented a critical executive step in translating the competition system into practical reality. The guidelines contain detailed mechanisms for assessing the competitive impact of major transactions, such as mergers and acquisitions, and apply what is known as the “competition test”, used to analyze the market in terms of party shares, market structure, and the ability of the new entities to influence prices and products.

The guidelines also clarify the reporting procedures for economic concentration, including the requirement for advance reporting 90 days prior to completing the transaction, standards for calculating annual sales, and the steps for review and evaluation. They also include practical examples and hypothetical scenarios that make it easier for companies to understand the legal framework and apply it practically.

Practical Applications: Regulatory Examples in Action.

The most recent phase has seen notable activity in regulatory intervention, particularly in strategic sectors such as telecommunications, renewable energy, and the private healthcare sector. The General Authority for Competition (GAC) has evaluated mergers between banks, major acquisitions in the retail sector, and even intervened in public-private partnership projects.

In some cases, the GAC imposed corrective conditions on transactions that it deemed could disrupt competitive balance, such as requiring companies to divest certain assets or regulate relationships between subsidiary companies to reduce monopolistic risks.

Challenges and Lessons Learned: Balancing Protection and Incentives

The experience of applying the system has not been without challenges. Notably, it has been difficult to keep pace with rapid transformations in certain sectors, particularly in digital markets and cross-border platforms. Additionally, the Authority had to balance the goal of encouraging investment with the goal of protecting competition, a delicate balance that requires precision in its handling.

Some of the key lessons learned include:

The necessity for flexibility in application without compromising core principles.

The importance of gradually applying standards to small companies.

The great value of continuous awareness for all market participants regarding competition rules.

Future Vision: Towards an Integrated System Enhancing the Kingdom’s Position.

Saudi Arabia is steadily moving towards enhancing its competition system through the digital transformation of regulatory and analytical tools, increasing international cooperation on cross-border issues, and expanding awareness and transparency programs.

The Kingdom also seeks to build national expertise in competition economics, providing training and professional development programs to support the efficiency of local human resources, as well as supporting scientific research in this vital field.

This system will become even more integrated when combined with other economic policies, such as supporting small and medium-sized enterprises (SMEs), encouraging foreign investments, and implementing privatization programs, ensuring the presence of a fair and efficient market environment that accommodates every economic actor equally.

In summary, this transformative journey of the Saudi competition system demonstrates how the Kingdom has moved from adopting theoretical concepts to advanced practical application, while carefully considering the local environment’s uniqueness and adhering to global competitiveness principles. This system, alongside the guidelines, today represents a cornerstone in achieving a diverse and sustainable economy in line with Saudi Vision 2030.

The Philosophical Foundations of the Saudi Competition System: Towards Sustainable Market Fairness.

The philosophy behind Saudi Arabia’s competition regulation stems from a comprehensive strategic vision that goes beyond the narrow concept of monitoring to a broader perspective of restructuring the economic environment based on fairness, efficiency, and balance. This philosophy aligns with the ambitious transformations led by Vision 2030, where fair competition is seen as a core pillar for building a diversified and prosperous economy that ensures the welfare of society as a whole.

Unlike traditional models that merely aim to deter monopolistic behavior, the Saudi competition system and the Economic Concentration Review Guidelines adopt a reformist philosophy focused on supporting market diversity, protecting consumers, stimulating innovation, and attracting investment, all within a flexible and transparent legal framework that accommodates the dynamic changes of the market.

Consumer Protection: The Core of Economic Fairness.

At the heart of this philosophy lies the consumer, whose protection is a top priority of the system. The regulation of competition ensures a variety of choices in the market, prevents practices that restrict diversity, or negatively impact quality. It also addresses price manipulation agreements or secret coordination between entities, fostering trust among consumers and pushing companies to improve performance and innovate, rather than rely on their market positions.

Promoting Diversity and Equal Opportunities

Through this system, Saudi Arabia seeks to free the market from excessive dominance by large entities, by regulating economic concentration processes and evaluating the impact of mergers and acquisitions based on clear mechanisms outlined in the guidelines. The system also focuses on empowering small and medium-sized enterprises (SMEs) by removing barriers to entry or sustainability in the market, ensuring fair opportunities for all economic players, which creates a healthy competitive environment contributing to inclusive and balanced growth.

Attracting Investment in a Fair Legal Environment

In the context of the economic openness led by the Kingdom, the system serves as a strategic tool to attract foreign investment by offering a clear and fair legal environment where all investors are treated equally, and their rights are protected from anti-competitive practices. This is reinforced by the Economic Concentration Review Guidelines, which include precise and public standards, along with reporting and review mechanisms that foster trust and transparency.

Stimulating Innovation and Enhancing Productivity

Through the competition philosophy, Saudi Arabia seeks to shift competition from mere price wars to a race for quality and value. By opening the market to new players and restricting monopolistic behaviors, the system encourages companies to enhance their efficiency, invest in research and development, which in turn reflects on the national economy with more innovative and diverse products and services.

Flexible and Realistic Governing Principles

The application of the system is based on a set of regulatory principles that prioritize fairness and effectiveness. The first of these principles is the proportionality principle, ensuring that standards are applied progressively according to the size of the entity and its market impact, while also taking into account sector-specific characteristics, such as investment funds or digital platforms, which are detailed in the guidelines.

The system also embraces the transparency principle by making the standards accessible, justifying decisions, and clearly announcing them to market participants, thereby enhancing investor confidence and regulatory effectiveness. Additionally, the flexibility principle is applied, allowing the system to adapt to rapid technological and economic changes and respond promptly to emerging challenges, especially in fast-growing sectors.

Proactive Executive Mechanisms

The system does not just respond reactively but adopts a proactive approach through an early warning system to monitor monopolistic indicators and intervene preventively when necessary. A comprehensive evaluation methodology is also implemented to analyze the market impact of transactions, examining value chains and indirect effects on competitiveness. The strategic balance policy is reflected in aligning market freedom with regulatory control, ensuring that neither one dominates the other, and protecting the economic interests of all parties without discrimination.

A Forward-Looking Development Vision

Saudi Arabia believes that establishing a culture of competition must begin from the roots, by integrating its concepts into educational curricula, implementing awareness programs for the private sector, and expanding dialogue with stakeholders. In this regard, the Kingdom is developing advanced regulatory tools using modern technologies and building analytical databases that contribute to evidence-based decision-making.

This effort extends to achieving integration between the competition system and broader economic policies, such as supporting SMEs, investment attraction strategies, and digital transformation initiatives, thereby enhancing the system’s effectiveness and making it an integral part of the overall economic vision.

A Philosophy That Combines Tradition and Modernity.

The Saudi competition system is not viewed as an isolated technical legislation but as a cornerstone of sustainable development. It represents a distinctive Saudi model that blends preserving national economic constants with adopting the best international practices, along with creating regulatory tools that align with the nature of the local market.

At its core, this model seeks more than just regulating the market; it works to create a dynamic and fair economic environment, achieving a balance between economic freedom and market fairness, and serving the Kingdom’s grand goals of building a more diversified, sustainable, and competitive economy.

The Legal Framework of the Saudi Competition System and the Economic Concentration Review Guidelines.

The Saudi Competition System, alongside the Economic Concentration Review Guidelines, forms an integrated legal framework to regulate market behavior, ensuring the protection of competitive mechanisms and preventing monopolistic practices that hinder growth or harm consumers. This system translates its goals through a set of principles and provisions that cover a broad range of economic activities and active entities, both inside and outside the Kingdom, whenever their actions affect the local market.

Economic Concentration as a Central Regulatory Tool.

The system addresses the concept of economic concentration as the cornerstone of regulating ownership and control transformations within markets. It refers to any process of merger, acquisition, or transfer of ownership or control between economic entities, whether directly or indirectly, partially or entirely. These operations are subject to mandatory review by the General Authority for Competition (GAC) if the combined sales of the involved parties exceed 200 million Saudi Riyals, with a mandatory reporting requirement 90 days before completing the transaction, granting the GAC enough time to assess the expected impact on market structure.

Scope of the System: Internal and External Extent

The system applies to all entities operating within the Kingdom, regardless of their legal form, including individuals and digital platforms. Additionally, the GAC’s jurisdiction extends to practices occurring outside the Kingdom if they have a direct or potential impact on competition within the local market. This extension reflects the alignment of the system with global regulatory trends, as markets are no longer confined to geographical borders.

Exemptions in the System.

Despite the broad application, the system allows for the exemption of some state-owned entities from its provisions, provided that they are exclusively authorized to offer specific goods or services under explicit legal provisions, such as a royal decree or a Cabinet decision. However, this exemption is limited to the specified activity and does not extend to the entity’s other operations.

Sanctions and Corrective Measures.

The system includes a range of sanctions for non-compliance, including financial fines that can reach 10% of annual sales. In addition, corrective measures may be imposed, such as requiring companies to divest certain assets or adjust the structure of the transaction. The system also grants the GAC the authority to impose regulatory conditions on transactions if approved conditionally, enhancing flexibility in decision-making without compromising the principle of protecting competition.

Concept of Control and Its Legal Dimensions.

A key issue addressed in the guidelines is the concept of “control”, which is not solely understood in terms of ownership but also includes the ability to exert actual or legal influence over an entity’s decisions, whether through stock ownership, contracts, voting agreements, or joint control. This broader definition is crucial to regulating indirect concentrations that might escape traditional definitions.

Competitive Analysis Methodology.

The review of concentration transactions relies on what is known as the “competition test”, which involves analyzing relevant markets in terms of product and geographical scope, estimating market shares, and assessing the potential impact on prices, quality, or innovation. The GAC takes into account complex factors such as barriers to entry, the degree of overlap between the parties involved, and the level of independence in operational decisions.

Reporting Standards and Compliance Limits

The guidelines outline specific reporting standards, such as when the combined sales exceed 200 million Saudi Riyals, or when the targeted entity in the transaction achieves local sales over 40 million Riyals. The transaction must also have a clear link to the Kingdom, either through actual commercial activity or a potential competitive impact. The reporting requests must be accompanied by mandatory documents, including financial data, transaction agreements, and an economic report outlining the impact of the transaction on the market structure.

The Guiding Nature of the Guidelines and Its Role in the System.

Although the Economic Concentration Review Guidelines are not legally binding, they serve as an essential interpretative reference for understanding the provisions of the system. They are subject to updates to keep pace with economic developments. The guidelines help guide companies and investors in understanding their legal obligations and avoiding practices that could be classified as violations, thus serving as a preventive tool.

Towards a Competitive System that Enhances Sustainable Growth and Market Transparency.

The Saudi Competition System and the Economic Concentration Review Guidelines represent one of the foremost regulatory models that reflect the profound transformation in the structure of the Saudi economy. They embody the Kingdom’s commitment to instilling the principles of transparency, justice, and equal opportunities. The system has evolved beyond merely addressing violations to become a strategic tool for reshaping the market based on efficiency and sustainability.

From what has been outlined, it is clear that the Kingdom has adopted an advanced approach that blends legal firmness with practical flexibility, prioritizing consumer protection, empowering small enterprises, fostering innovation, and creating an attractive and safe business environment for both domestic and foreign investors. Furthermore, the integration of the system and the guidelines has created a legal framework with a practical executive dimension, helping companies comply and providing the Authority with precise analytical tools for organized and thoughtful intervention.

With the ongoing updates and developments in regulatory tools, as well as enhancing awareness and integration with major economic policies, this system is expected to become one of the core pillars supporting the Saudi Vision 2030 objectives, contributing to building a more competitive, diverse, and sustainable Saudi economy.