Thursday, August 25, 2016

SR 30 million fines slapped on 6 famous soft drink companies

The Appeals Court in Riyadh has just upheld the legal sentence issued by the Administrative Court, which had placed a fine on six soft drink companies for a collective decision to increase the prices of their soft drink products by around 50 percent, back in 2009. The companies had been a clear violation of the regulations and rules, which prohibit such acts. The Appeals Court in Riyadh has upheld a monetary fine amounting to SAR 5 million for each of the six soft drink companies. The total accumulated fine amounts to SAR 30 million.

The Appeals Court in Riyadh has stated that all 6 of the companies were in violation of Article 4 subsection 1 of the rules of competition, which clearly prohibits having such an agreement, contract or the general act or practice of fixing the price of any product with a competitor company or companies. The regulations apply whether the practice had been in the form of a verbal or a written agreement. In both the cases, it is illegal to fix prices with the competitors. The specific law upon which the court has based the judgment calls for the prohibition of companies from fixing the price of any service or goods. It also states that companies are not allowed to decrease, increase or consolidate their prices in any way which has a negative effect on the competition between business competitors.

Official reports have stated that six companies had collectively agreed to increase the cost of their products from SAR 1 to SAR 1.5 by the end of 2009. However these companies were not able to come up with any type of reasonable justification behind their sudden and sharp increase in price. The probe which is six years old has now concluded that all 6 of the companies had agreed upon the increase of prices of their products only for an increase in their profits and nothing else.

The Secretary of the Council of Competitiveness, Mr. Ibrahim Al Salim, has confirmed the fact that the order had been due to the six firms that were in agreement to an increase in price of their products and for other noted violations as well.  He further stated that the Council of Competitiveness has asked all 6 of the companies through the Council’s official correspondence to withdraw their collective decision to have the prices of their products increased so that they can possibly avoid facing punishment for doing so and also be exempt from some of the fines.

Not one out of the six companies chose to respond to the request made by the official correspondence of the Council of Competitiveness.  He also further denied that there were not requests made from any of the companies to go back to the lower / older prices of their products as of yet. A lawyer who is representing the six companies in question in this case, Za’ar Al Dossari, has stated that all of the companies are going to be challenging the orders of the court in the Supreme Administrative Court, sometime next week.

Source: Arab News

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