Driving competition reform

Baker Botts outlines key developments and forward-looking strategies in MENA competition law enforcement, as discussed during the inaugural MENA Antitrust Policy Symposium recently held in Saudi Arabia.

The 1st MENA Antitrust Policy Symposium was recently held at Prince Sultan University in Riyadh, Saudi Arabia. The event was co-hosted by Baker Botts, George Washington University and Prince Sultan University. Representatives from the Kingdom of Saudi Arabia’s General Authority for Competition (GAC) interacted with participants — including in-house counsel, academics, and private practitioners — to discuss recent trends in competition law enforcement within Saudi Arabia and the MENA region. Key takeaways from the conference are summarised below and included insights shared by the participants and their perspectives on the future development of competition law in the region.

This symposium marked a significant milestone as the first of its kind in the Kingdom of Saudi Arabia with regulators and universities and the private sector focused specifically on antitrust law and policy. Dignitaries included Dr. Fahad Al-Shathri, CEO of the GAC and Chair of the Arab Competition Network, who also delivered a keynote address. Dr. Ahmed Al-Yamani, President of PSU, provided welcoming remarks. Dr. Hesham Alogeel, Deputy CEO for Economic Affairs at the GAC, participated in a panel on competition opportunities and challenges in the MENA region. Mr. Talal Alhogail, Head of the Mergers and Acquisitions Unit at the GAC, spoke on cross-border merger control considerations. Mr. Antonio Capobianco, the Deputy Head of the OECD Competition Division, delivered an important address that summarised the day’s event and put it into context with developments in antitrust law across the MENA region and globally. Leading academics, Prof. Mohammad Nurunnabi from PSU and Aurelien Portuese from GWU, chaired panels and participated in the discussion.

General counsels and other expert in-house leaders from significant companies within the region added an important dimension to the discussion. For example, Ms. Shaima Bakhsh, General Counsel for Hassan Investment Company explained how they benefited from direct consultations with the GAC, “As part of updating the economic concentration guidelines, there were some private sector consultations, and we were a part of that. We were very lucky to be able to sit down with the GAC and share our experience and some of our concerns as a financial investor. And ultimately, in the updated guidelines, some of the exemptions for joint ventures, I’m happy to say, reflect the discussions that we were having with the team at the GAC.” Similarly pertinent and insightful views were shared by other in-house leaders, including: Mr. Ghassan Shawli, Chief Legal Officer, ACWA Power; Dr. Saleem Sheikh, Chief Legal Counsel, SISCO Holdings; Dr. Raed Al-Saadouni, General Counsel, ASMO; Mr. Waleed Alghosoon, VP, Legal Affairs, STC; Mr. Chris Idermark-Boyd, Senior Counsel & Competition Lead, Saudi Aramco; Dr. Lidia Esther Aviles, European Climate Pact Ambassador, Founder & CEO of AELSTONE, Belgium; and Dr. Nader Almutairi, Corporate Sustainability Officer, Academy of Learning.

KEY TAKEAWAYS

Several key themes and takeaways emerged, highlighting the significant progress and the opportunities ahead, with a clear emphasis on the leadership role played by the GAC in Saudi Arabia:

1. A dynamic and developing competition landscape:The MENA region is experiencing a significant transformation in its competition landscape, with countries increasingly adopting or revising competition laws and establishing independent enforcement authorities. Effective competition policy is recognised as a key structural reform that could bring significant economic benefits, with empirical studies suggesting it could potentially increase productivity growth by up to 12% and boost annual economic growth by 2-3%. While challenges remain, such as varying institutional development and the need to build a stronger competition culture, there is noticeable progress and a shift in mindsets among businesses regarding antitrust concerns. In particular, there is a greater awareness of competition law within the region and increasingly, businesses are appreciative of these changes as they begin to perceive how it is helping to develop a more competitive marketplace that benefits business interests, especially SMEs.
2. Saudi Arabia’s leadership and modernisation: Saudi Arabia, with the GAC at the forefront, is leading the way in competition enforcement in the GCC. The Kingdom’s reform process, particularly the overhaul of its competition framework in 2019 with the establishment of the independent GAC and the transition from a market share to revenue-based merger filing thresholds, offers valuable lessons. The GAC has proactively developed and updated comprehensive guidelines, providing much-needed clarity and predictability. While there remain concerns about some of the aspects of the merger control process, including relatively low turnover thresholds, representatives from the business community generally complimented the GAC’s approach on their consultative process in developing guidelines, actively engaging with stakeholders from the private sector, including law firms, financial investors, and independent consultants. This engagement has resulted in practical adjustments, such as exemptions for certain investment funds acquiring minority stakes, informed directly by private sector input.
3. Active enforcement and market studies:Along with an impressive number of merger filings – the GAC reviewed 281 mergers in the 2020-24 time period – and on cartel cases, achieved a record number of investigations and sanctions, notably against over 50 cartels over the last couple of years, especially public procurement cases. The GAC also actively conducts market studies in sectors like aviation, agriculture, and professional services to identify potential competition issues and advocate for regulatory reforms. which also serve to indicate what are competition agency enforcement priorities and signal areas of expected future enforcement.
4. Navigating complex digital and cross-border issues:The symposium highlighted how MENA authorities, including the GAC, are effectively adapting to review complex cross-border transactions involving digital platforms and strategic sectors. Cases like the Uber-Careem merger, reviewed by multiple authorities in the region including the GAC, raised complex issues such as algorithmic pricing and data advantages. The GAC has also become more willing to engage with parties to discuss the formation of remedies to address potential anticompetitive concerns.
5. Competition policy supporting sustainability goals:The discussions explored the vital role competition regulators can play in promoting sustainable practices. As consumer preferences increasingly incorporate sustainability considerations, businesses adopting such practices can gain a competitive advantage. Saudi Arabia’s ambitious sustainability initiatives under Vision 2030, such as the Saudi Green Initiative, demonstrate a strong commitment to integrating sustainability into the economic agenda. Competition policy can support these national goals by ensuring markets function effectively and do not hinder businesses seeking to compete on sustainability factors.
6. Fostering regional cooperation and competition culture:Regional cooperation mechanisms like the Arab Competition Network (ACN), currently chaired by Saudi Arabia, are being used by the authorities as platforms for discussing challenges, upgrading laws, and exchanging knowledge on emerging issues like digital markets. Platforms like the Arab Competition Forum (ACF), involving international organisations, further enhance dialogue and best practice sharing. Bilateral cooperation, including between the GAC and other regional authorities, is also expanding. Building a stronger competition culture through expanded educational initiatives, professional training, and raising awareness among businesses and government officials is important for the long-term success of competition policy in the region. However, the increased information sharing between the agencies has also raised concerns among the business community. In particular, there are concerns about the sharing of confidential information among agencies. The agency officials responded to these concerns by explaining that strict confidentiality restrictions are in place.

CONCLUDING THOUGHTS

In conclusion, the evolving antitrust landscape in the MENA region, spearheaded by authorities like Saudi Arabia’s GAC, presents several critical implications for clients. Businesses must now proactively integrate heightened antitrust awareness into their strategic planning for transactions that may impact jurisdictions within the MENA region, anticipating more rigorous scrutiny of transactions, particularly those with international dimensions or involving digital markets. This necessitates a diligent approach to compliance, a readiness to engage with increasingly sophisticated regulators, and an understanding that regional cooperation among authorities means that transactions are likely to face more coordinated and comprehensive reviews across multiple jurisdictions. Ultimately, navigating this environment successfully will require clients to stay informed of these dynamic changes and prepare for a greater likelihood of enforcement action and regulatory engagement.

Text by:

1. Hugh M. Hollman, partner, Baker Botts
2. Shadi Haroon, partner, Baker Botts
3. Paul Lugard, partner, Baker Botts
4. Rakan Alyusuf, special counsel, Baker Botts