Article 3 of the Saudi Competition Law
المادة 3 من نظام المنافسة
The article sets the scope of the Competition Law as establishments inside the Kingdom and external practices affecting it, excludes exclusively authorized government bodies, and makes the Authority the primary competent body.
Official text (Arabic)
This article has not been amended since the law was issued.
1- مع عدم الاخلال بما ورد في الأنظمة الأخرى, تطبق أحكام النظام على ما يأتي:
أ- جميع المنشآت داخل المملكة.
ب- الممارسات التي تقع خارج المملكة, ذات الأثر المخل بالمنافسة العادلة داخل المملكة وفقاً لأحكام النظام.
2- يستـثـنى من الفقرة (1) من هذه المادة المؤسسات العامة والشركات المملوكة للدولة إن كانت المؤسسة أو الشركة مخوّلة وحدها من الحكومة بتقديم السلع أو الخدمات في مجال معين.
3- تعد الهيئة صاحبة الاختصاص الأصيل فيما قد ينشأ عند تطبيق أحكام النظام من تعارض أو تداخل مع اختصاصات الأجهزة الحكومية الأخرى.
وتحدد اللائحة الضوابط الواجب مراعاتها في تطبيق هذه المادة.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 3 explained in plain English
This article answers the question: to whom does the Competition Law apply? This is without prejudice to what is stated in other laws.
- Scope of application: the Law applies to:
- All establishments inside the Kingdom.
- Practices that take place outside the Kingdom if they have an effect that undermines fair competition inside the Kingdom under the provisions of the Law. What counts here is the practice's effect on the Saudi market, not where it took place.
- The exception: this does not apply to public institutions and state-owned companies, but on condition that the institution or company is solely authorized by the government to provide the goods or services in a particular field. If this condition is not met, the exception does not cover them, according to the text.
- The Authority's primary jurisdiction: if a conflict or overlap arises in applying the Law with the jurisdictions of other government bodies, the General Authority for Competition is the body with primary jurisdiction.
The Implementing Regulations determine the controls to be observed in applying this article, so no details are assumed beyond what is in the text. An establishment under Article 1 is every natural or legal person who carries out an economic activity, which makes the scope broad. Article 4 then follows to provide that prices are set according to market rules and free competition, with specific exceptions.
Foreign or government companies that do not know where they stand under the Law are advised to consult a lawyer specialized in competition and commercial cases.
Practical example
Two foreign companies outside the Kingdom agreed to divide export markets between them, which led to higher prices for their products in the Saudi market. Under this article, the Competition Law can cover this practice even though it took place outside the Kingdom, because its effect that undermines competition occurred inside it.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 3 of the Saudi Competition Law
Does the Competition Law apply to foreign companies?
It applies to practices that take place outside the Kingdom if they have an effect that undermines fair competition inside the Kingdom under the provisions of the Law, in addition to all establishments inside the Kingdom.
Are state-owned companies exempt from the Competition Law?
Public institutions and state-owned companies are excluded only if they are solely authorized by the government to provide the goods or services in a particular field.
Who has jurisdiction if the Competition Law overlaps with another government body?
The General Authority for Competition is the body with primary jurisdiction in case of conflict or overlap, and the Regulations determine the controls for applying this.
More articles on General Provisions of the Competition Law
- Article 1
The article defines the key terms of the Competition Law, such as establishment, market, dominant position, economic concentration, the Authority and the Committee.
يقصد بالمصطلحات الآتية -أينما وردت في هذا النظام- المعاني المبينة أمام كل منها، ما لم يقتض السياق غير ذلك: النظام: نظام المنافسة. الهيئة: الهيئة العامة للمنافسة
- Article 2
The article explains that the Competition Law aims to protect and encourage fair competition and combat monopolistic practices, in order to improve the market environment and develop the economy.
يهدف النظام إلى حماية المنافسة الــعادلة وتشجيعها، ومكافحة ومنع الممارسات الاحتكارية التي تؤثر على المنافسة المشروعة أو على مصلحة المستهلك؛ بما يؤدي إلى تحسين ب
- Article 4
The article provides that prices of goods and services are subject to market rules and free competition, except those priced by a Council of Ministers decision or under a law.
تكون أسعار السلع والخدمات وفقاً لقواعد السوق ومبادئ المنافسة الحرة، عدا أسعار السلع والخدمات التي تحدد بناءً على قرار من مجلس الوزراء، أو بموجب نظام.
- Article 26
The article provides that the current Competition Law replaces the previous Competition Law issued by Royal Decree No. M/25 dated 4/5/1425 AH.
يحل النظام محل نظام المنافسة، الصادر بالمرسوم الملكي رقم (م / 25) وتاريخ 4 / 5 / 1425هـ.
- Article 27
The article requires the Authority's Board to issue the Implementing Regulations of the Competition Law within 180 days of the Law's publication in the Official Gazette, to take effect from the date the Law takes effect.
يصدر المجلس اللائحة خلال (مائة وثمانين) يوماً من تاريخ نشر النظام في الجريدة الرسمية، ويعمل بها من تاريخ نفاذه.
- Article 28
The article provides that the Competition Law takes effect 180 days after the date of its publication in the Official Gazette.
يُعمَل بهذا النظام بعد (مائة وثمانين) يوماً من تاريخ نشره في الجريدة الرسمية.
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.