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Life Sciences | Saudi Arabia competition authority issues fine for obstructing dawn raid

In the aftermath to the Covid-19 pandemic, there has been a surge in inspections across the globe in the last year. A shift to home and hybrid working increases the likelihood that authorities will use their powers to conduct inspections at domestic premises, which historically have been rare. As competition authorities continue to take a strict stance on any form of obstruction during dawn raids, it is crucial that employees understand how to behave in an inspection, whether it targets their homes or place of work.

On 27 February 2023, the General Authority for Competition in Saudi Arabia (GAC) announced that it had imposed a SAR13 million fine (approx. EUR3.3m) on medical company Medical Supplies and Services Company Limited (MediServ) for obstructing a dawn raid.

The inspection was conducted as part of the GAC’s investigation into whether certain entities violated Saudi Arabia’s competition law by restricting the supply of goods or services during the Covid-19 pandemic.

The GAC has not published the details of the obstruction. The authority’s press release notes only that MediServ breached Saudi Arabia’s competition law.

This enforcement decision is evidence that the GAC is using its inspection powers and will sanction any conduct aimed at hindering its investigations. 

More broadly, a body of precedents shows that antitrust authorities take a zero-tolerance approach and may impose heavy fines where companies fail to cooperate. For example, in 2008, the European Commission (EC) fined energy company E.ON EUR38m for breaking a seal affixed by the EC during a dawn raid. In 2012, Czech companies EPH and its subsidiary EP Investment Advisors were fined EUR2.5m by the EC for changing passwords on blocked accounts and attempting to redirect emails from key personnel inboxes. In 2019, the UK Competition and Markets Authority (CMA) fined he guitar manufacturer Fender GBP25,000 (approx. EUR29,400) for hiding notebooks during the inspection. This is the first time the CMA has sanctioned a company for obstructing a dawn raid. These cases also illustrate that the obstruction may take different forms and that authorities have taken an expansive approach to what may be considered obstructive conduct.

In light of the global uptick in antitrust inspections, the decision of the GAC serves as a timely reminder of the consequences of obstructing a raid and of the need for companies and their employees to be adequately prepared. This means that dawn raid manuals need to be in place and up-to-date and, crucially, relevant staff (including senior management, receptionists and the IT team) need to be trained on what to expect, how to answer the relevant authority’s questions and what kind of behaviour may be considered as a dawn raid obstruction.