GAC Publishes Violations Case for the First Time Since 2020

The Saudi General Authority for Competition (GAC) recently published their decision to fine two companies for failing to notify an economic concentration to the GAC. This gun-jumping case deviates from the GAC’s recent practice in two ways. While the GAC substantially increased their enforcement activities over the past years, they refrained from publishing details on cases and parties involved. Moreover, the fines imposed in the recent case were considerably lower than ‘standard’ fines previously imposed.

The recent gun-jumping case concerned the acquisition of Atabat Al-Bab Telecom and Information Technology Company by Panda Retail Company. Both acquirer and target are active in the telecommunication sector. The GAC fined each company with SAR 400k (approx. USD 107k) for failure to notify the acquisition to the GAC despite the transaction meeting the notification thresholds and leading to a change of control.

This case is a deviation from past GAC practice in two ways. Firstly, The GAC has substantially increased their enforcement against violations of the Kingdom’s merger control and antitrust regime. Yet, they have not released any meaningful details on gun-jumping fines since 2020. Since then the GAC only released very limited information on violations. No cases or numbers were disclosed for 2021. According to the official report released by the GAC on their activities in 2022, they issued fines in 15 transaction that year—compared to four fines issued in 2020. In their 2023 activity report the GAC again did not release any information on fines imposed or violations cases. Furthermore, in their 2022 report the authority did not disclose any details on the companies fined, the relevant transaction, or the fine amounts. The report only cryptically stated the general sectors concerned.

The recent release of information on a gun-jumping, may point to a change in practice of the GAC vis-à-vis publication of violations. Still, in their recent release the GAC did not provide detailed information on the case either. Information was limited to the identity of the parties, the type of transaction, and the fine amount. Further information—such as the GAC’s reasoning or how they discovered the transaction—were not disclosed. 

Secondly, the fines imposed in the recent case where low compared to prior fine practice of the authority. In the recent case the GAC imposed fines of SAR 400k (approx. USD 107k) against each party—the acquirer and the target. From the information available on prior cases, the GAC quite consistently issued fines in the amount of SAR 10m (approx. USD 2.6m). The fines now announced may point to a change in practice of the GAC issuing more individualized fines taking the impact of the transaction on competition and the economic situation of the parties into account.

Whether the recent case was a one of deviation from prior GAC practice or whether it is the beginning of a lasting change remains to be seen. Increased transparency by the GAC on their enforcement activity—while unfortunate for the parties fined—would allow parties to better understand the interpretation of the Saudi merger control and antitrust regime by the GAC. Such better understanding would lead to increased certainty, which would raise investor confidence in the Kingdom. Still, for the GAC’s release of information on their enforcement activities to have noticeable positive effects, they would have to be more detailed. In particular, descriptions of the GAC’s reasonings would be very helpful.