New GAC Guidelines on Anti-Competitive Agreements: A Compliance Roadmap for Businesses in Saudi Arabia

The Saudi General Authority for Competition (GAC) has issued new guidelines on anti-competitive agreements under the Saudi Competition Law and its Executive Regulations. The guidelines provide a detailed framework for how the GAC assesses horizontal and vertical agreements, including arrangements between competitors, suppliers, distributors, and other market participants.

For businesses operating in Saudi Arabia, the guidelines are important for two reasons. First, they clarify how the GAC interprets restrictive agreements. Second, they provide a practical roadmap for companies to assess their own commercial arrangements before they attract regulatory scrutiny.

The message is clear: businesses active in the Kingdom should review their agreements, decision-making processes, and information-sharing practices with competition law compliance in mind.

Broad Scope of Application

The guidelines take a broad approach to anti-competitive agreements. They apply to written and oral arrangements, explicit and implicit understandings, and conduct that either intends to restrict competition or has that effect in practice.

This means that a formal contract is not required for competition law risk to arise. A common understanding, coordinated behavior, or even parallel conduct supported by evidence of communication may be enough to attract GAC attention.

The rules also apply broadly to all economic entities, whether natural or legal persons, and regardless of whether the entity has formal legal personality. This reflects the GAC’s intention to capture all forms of coordination that may undermine competition in Saudi markets.

Strict Prohibitions and Effects-Based Review

One of the key distinctions in the guidelines is between agreements that are prohibited outright and agreements that require further assessment.

Certain practices are treated as restrictions “by object.” These are considered inherently harmful to competition and are prohibited without the need to prove actual anti-competitive effects. The list includes price fixing, market allocation, output restrictions, and bid rigging. These practices are treated as serious violations and are not expected to benefit from efficiency arguments.

Other agreements are assessed based on their actual or likely effects. These “by effect” restrictions are reviewed in context. The GAC considers whether the arrangement harms competition, whether it creates efficiencies, whether consumers or the economy benefit, and whether the restriction is necessary and proportionate.

This distinction is important. Not every cooperation agreement is unlawful. However, businesses must be able to show that any restrictive elements are limited, justified, and connected to real efficiencies.

Evidence of Collusion

The guidelines make clear that direct evidence of an anti-competitive agreement is not always required. The GAC may infer collusion from circumstantial evidence, including parallel pricing, simultaneous market behavior, communications between competitors, or opportunities for coordination.

For example, if several market participants raise prices at the same time, that alone may not prove unlawful coordination. However, if the price changes are accompanied by communications, patterns of information exchange, or other signs of aligned conduct, the GAC may investigate whether the companies acted independently or coordinated their market behavior.

This has practical implications for internal compliance. Businesses should ensure that employees understand the risks of informal conversations with competitors, trade association discussions, pricing exchanges, and shared strategic information.

Exceptions and Safe Harbours

The guidelines recognize that some arrangements fall outside the prohibition or may qualify for exemption. These include agreements within a single economic entity under common ownership or control, genuine agency agreements, and certain vertical arrangements.

However, the GAC appears likely to interpret these exceptions strictly. A corporate structure will not protect parties if supposedly related entities act independently in the market. Agency arrangements may lose protection if they include restrictive clauses that go beyond the genuine agency relationship. Vertical arrangements may also raise concerns if they are used to disguise horizontal collusion.

Businesses should not assume that a structure is safe simply because it fits a general category. The substance of the relationship and the actual competitive impact remain critical.

How the GAC Assesses Market Impact

When reviewing agreements that are not prohibited outright, the GAC follows a structured effects analysis. It first identifies the nature of the arrangement, including whether it is horizontal, vertical, or mixed. It then assesses the effect on competition by looking at price, output, quality, variety, and innovation.

The GAC also considers market power. Relevant factors include the parties’ market shares, the stability of those shares, barriers to entry, consumer switching behavior, the financial strength of the parties, the distinctiveness of the products or services, and the regulatory framework in the relevant sector.

This approach is closely aligned with the type of analysis used in merger control. It requires businesses to consider not only what an agreement says, but how it may affect the competitive structure of the market.

Information Exchange as a Key Risk Area

The guidelines devote particular attention to the exchange of commercially sensitive information. This includes pricing, costs, capacity, output, margins, customer data, and strategic plans.

Such exchanges are especially risky in concentrated markets or markets with high barriers to entry. Even where companies do not expressly agree to fix prices or allocate markets, the exchange of sensitive information can reduce uncertainty and make coordination easier.

The GAC emphasizes that companies must preserve independent commercial decision-making. This is particularly relevant in M&A discussions, joint ventures, supplier negotiations, trade associations, and cooperation projects. In transaction settings, clean teams may be necessary to prevent inappropriate information sharing between competitors.

Horizontal and Vertical Agreements

The guidelines also address common forms of horizontal cooperation, including joint research and development, joint purchasing, joint production, and joint distribution. These arrangements may generate efficiencies, particularly where smaller competitors combine resources to reduce costs, improve innovation, or expand market access.

However, these arrangements must be carefully structured. They should not become a cover for price coordination, customer allocation, output restrictions, or the exchange of sensitive information. Efficiencies must be real, verifiable, and passed on to consumers.

Vertical agreements are generally viewed as less harmful than agreements between competitors, but they can still raise competition concerns. Exclusive distribution, selective distribution, exclusive branding, dual distribution, and resale price maintenance may all attract scrutiny where market power is significant.

Resale price maintenance is a particular focus. Fixed or minimum resale prices, maximum discount limits, margin controls, or indirect pressure on distributors may restrict price competition. The GAC also warns against hub-and-spoke arrangements, where vertical agreements are used to coordinate pricing or conduct among distributors. These arrangements may be treated as serious competition law violations.

Practical Implications for Businesses

The new guidelines provide a useful compliance roadmap for companies operating in Saudi Arabia. Businesses should review agreements with competitors, suppliers, distributors, agents, and commercial partners to identify clauses or practices that may restrict competition.

Particular attention should be given to pricing, exclusivity, information sharing, distribution restrictions, joint purchasing, joint bidding, franchise models, and cooperation with competitors. Where an arrangement creates efficiencies, those efficiencies should be documented clearly and linked to consumer or economic benefits.

The guidelines also reinforce the importance of training employees who interact with competitors, participate in trade associations, manage distributors, or negotiate commercial terms. Competition law risk often arises through informal conduct, not only formal contracts.

Speak With BREMER About Saudi Competition Law Compliance

The GAC’s new guidelines signal a strict but structured approach to anti-competitive agreements in Saudi Arabia. BREMER advises clients on competition law compliance, commercial arrangements, merger control, and regulatory risk across the region.

If your business operates in Saudi Arabia, BREMER can help review your agreements and develop a practical compliance strategy.