JEDDAH: The Appeals Court in Riyadh has upheld the sentence of the administrative court, which fined six soft drink companies for their joint decision to increase the prices of their products by 50 percent in 2009. The companies were in violation of rules and regulations, which prohibit such practices.
The court has upheld a fine of SR5 million for each company; the six companies have been fined a total of SR30 million.
The court said the companies violated Article 4/1 of the rules for competition, which prohibit such agreements, contracts and practices of fixing prices among companies which are competitors. The regulations apply whether the practice was in the form of a written or verbal agreement. Either or both are illegal.
The law on which the court has based its judgment prohibits companies from fixing prices of goods or services and increasing, decreasing or consolidating in a way that undermines competitiveness.
Reports say the six companies had agreed to increase their products’ cost from SR1 to SR1.5 at the end of 2009. There was no justifiable reason for the price increase.
The six-year probe concluded that the companies agreed to increase the prices of their products solely to increase profits.
Ibrahim Al-Salim, secretary of the Competitiveness Council, confirmed that the order was due to the six firms’ agreement to increase prices and for other violations.
He said the council had asked the companies through official correspondence to withdraw their decision to increase the price so that they could avoid punishments and fines. The companies did not respond to the request, he said. He denied that there was currently any request from the companies to go back to old prices.
Za’ar Al-Dossari, a lawyer representing the six companies, said the companies would challenge the order next week in the Supreme Administrative Court.
The court has upheld a fine of SR5 million for each company; the six companies have been fined a total of SR30 million.
The court said the companies violated Article 4/1 of the rules for competition, which prohibit such agreements, contracts and practices of fixing prices among companies which are competitors. The regulations apply whether the practice was in the form of a written or verbal agreement. Either or both are illegal.
The law on which the court has based its judgment prohibits companies from fixing prices of goods or services and increasing, decreasing or consolidating in a way that undermines competitiveness.
Reports say the six companies had agreed to increase their products’ cost from SR1 to SR1.5 at the end of 2009. There was no justifiable reason for the price increase.
The six-year probe concluded that the companies agreed to increase the prices of their products solely to increase profits.
Ibrahim Al-Salim, secretary of the Competitiveness Council, confirmed that the order was due to the six firms’ agreement to increase prices and for other violations.
He said the council had asked the companies through official correspondence to withdraw their decision to increase the price so that they could avoid punishments and fines. The companies did not respond to the request, he said. He denied that there was currently any request from the companies to go back to old prices.
Za’ar Al-Dossari, a lawyer representing the six companies, said the companies would challenge the order next week in the Supreme Administrative Court.
