Abuse of Dominant Position Under Saudi Competition Law
The Saudi Competition Law gives the General Authority for Competition (GAC) the power to intervene when a firm uses its dominant position to restrict competition. Dominance itself is not illegal, but certain conduct can cross the line into abuse. Recent enforcement actions have highlighted the importance of understanding how the GAC applies the legal test. This guide outlines the key factors the Authority considers and the types of behavior that are likely to be regarded as abusive.
How the GAC Determines Market Dominance
To assess dominance the GAC looks at market share, the ability to act independently of competitors, and the presence of barriers to entry. Market definition is the first step, usually based on product substitutability and geographic scope. A share above a certain threshold, combined with evidence of price‑setting power or control over essential inputs, often triggers a deeper review. The Authority also examines whether the firm can sustain its position over time without competitive pressure.
Predatory Pricing as an Abuse of Dominance
Predatory pricing occurs when a dominant firm sells its products below cost with the intention of driving rivals out of the market. The GAC evaluates whether prices are below an appropriate cost benchmark and whether there is a realistic prospect of recouping losses later. Isolated short‑term discounts are generally permissible, but a systematic pattern that harms competitors may be deemed abusive. Firms should keep detailed cost records and be prepared to demonstrate that pricing reflects legitimate efficiency gains.
Tying and Bundling Practices
Tying involves making the purchase of one product conditional on the purchase of another product that the dominant firm controls. The practice is problematic when the tied product is not essential to the primary product and the condition limits consumer choice. The GAC assesses the relative importance of the two products, the existence of alternative sources, and whether the arrangement forecloses competition. Companies should consider offering the products on a separate basis or providing clear, voluntary bundling options.
Refusal to Deal and Exclusive Dealing
Refusal to deal refers to a dominant firm denying access to essential facilities or inputs without a justifiable reason. Exclusive dealing clauses that require customers or suppliers to work only with the dominant firm can also restrict competition if they lock up a significant share of the market. The Authority looks at the duration, scope and market impact of such arrangements. Reasonable contractual protections are acceptable, but terms that foreclose competitors must be carefully calibrated.
Businesses that occupy a strong market position should conduct regular competition risk assessments and document the commercial rationale behind pricing and contractual decisions. Internal policies that require legal review before implementing discounts, bundling or exclusive agreements can reduce exposure. Engaging with the GAC proactively, for example through informal consultations, helps clarify whether a particular practice may be viewed as abusive. Training sales and procurement teams on the core principles of the Competition Law further mitigates inadvertent violations.
If your company is concerned about the limits of dominant conduct under Saudi competition law, our team can provide tailored advice and help you design compliant commercial strategies. Contact Northman Sterling Legal to discuss your specific situation.
Contact Northman Sterling Legal to discuss your matter with our team.