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Saudi Arabia competition authority issues fine for obstructing dawn raid

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.

Under this law an entity “may not prevent a law enforcement officer or investigator from carrying out a task assigned to him in accordance with the powers conferred upon him by this Law, nor may it withhold information, provide misleading information, or conceal or destroy documents that benefit the investigation”. Breaches could lead to fines of up to 5% of the entity’s annual sales or up to SAR5m (approx. EUR 1.3m) if the sales value cannot be calculated.

Notably, the Administrative Court of Appeal in Riyadh has already dismissed an appeal against the GAC’s decision.
After an unsurprising lack of raids during the Covid-19 pandemic, there has been a surge of inspections across the globe in the last year. Interestingly, a shift to home and hybrid working has also opened up the possibility of inspections at domestic premises. This enforcement decision is evidence that the GAC has joined the ranks of authorities conducting antitrust raids.

In light of the global trends, the decision of the GAC also serves as a timely reminder of the consequences of obstructing a raid.

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 imposed its first ever fine for obstructing a dawn raid. The guitar manufacturer Fender was fined GBP25,000 (approx. EUR29,400) for hiding notebooks during the inspection.
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.

Overall, it is clear that companies and their employees must be adequately prepared for inspections. It is essential to ensure that dawn raid manuals are in place and up-to-date and that the relevant staff (including senior management, receptionists and the IT team) are trained on what to expect, how to answer the relevant authority’s questions and, crucially, what kind of behaviour may be considered as a dawn raid obstruction.