Article 13 of the Saudi Electricity Law

This article regulates competition in the electricity activity, without prejudice to the Competition Law. It requires the Ministry and the Authority to create an investment environment that encourages reliability and availability of supplies in all regions, promotes the private sector, and ensures the consumer's freedom of choice. It then imposes five obligations on the licensee:

1. Registering agreements: it registers with the Authority any agreement with another licensee or with consumers that relates to price, tariff, or the right to use the transmission or distribution network or assets linked to the activity, as the regulations specify. Any provision of an agreement concluded after the law took effect that conflicts with the law, the organization or the regulations is void. The Authority may approve any of these agreements in accordance with the regulations.
2. Not hindering competition: it may not enter into any agreement or arrangement that hinders or restricts competition, and any such action is void.
3. A dominant position: if it holds a dominant position, it must not breach regulatory instructions and requirements, including those that limit competition. Under Article 1, a dominant position means having the power to influence the fairness of decision-making or legitimate competition.
4. Mergers: it obtains the Authority's approval before merging with others or acquiring most of their shares or assets, and must notify the Authority of any preliminary agreement to merge.
5. Buying shares: it obtains the Authority's approval before buying 5% or more of the shares of any other licensee, or its securities or any form of equity, or acquiring a smaller percentage if it would create a dominant position, in accordance with the regulations.

The regulations specify the controls to be observed under this article. In practice, acquisition and merger deals in the electricity sector need the Authority's approval before they are completed, and agreements on price, tariff and network use must be registered with the Authority. It is wise for a company to consult a lawyer who specializes in commercial and corporate matters before signing any preliminary agreement.