1 Abstract of Doctoral Dissertation: Commercial Competition
Abstract of PhD Dissertation
Title: Commercial Competition - A Comparative Study.
Researcher: Abdul -‘Aziz Ibn Muhammad Ibn Abdullah al-Nāsir.
Supervisor: Dr. Abdur-Rahmān Ibn Sālih al-Atram.
All praise is due to Allah, Lord the worlds, and may prayers and peace be extolled upon the
noblest of all His Prophets and Messengers, our Prophet Muhammad, his family and
companions. To proceed:
Allah, the Exalted, says, "Allah has allowed trade and forbidden interest." (al-Baqarah: 275)
This principle is the cornerstone of the Islamic economic system from which man-made
economic systems have deviated, either from its first half (i.e. trade is permissible), as is the case
with socialism, or from its second half (i.e. interest is forbidden), as is the case with capitalism.
Consequently, both systems have lead to great corruption as evidenced by the results of their
application.
One of the results of the capitalist system was the spread of monopolies aimed at achieving the
greatest possible profit by controlling production and prices. This created the need to establish
laws that protect competition and combat monopoly. The very first legislation enacted after the
widespread growth of monopolistic practices was the Sherman Antitrust Act (1890) in the United
States of America.
Ever since then, laws have been created globally addressing the issue of economic concentration
and market dominance, and prohibiting monopolistic and other anti-competitive practices.
Among these laws is the Competition Law of Saudi Arabia, enacted [by royal decree] on
4/5/1425 A.H (22 June 2004).
In addition to competition law, there are trade laws prohibiting illegal methods of attracting
customers that fall under the legal term "unfair competition".
This dissertation researches the various types of commercial competition (whether permissible or
prohibited) and the Saudi Arabian laws and regulations related to them, with occasional mention
of other [countries'] laws and a comparison of the aforementioned to Islamic law.
The dissertation contains an introduction, a preface, five chapters and a conclusion, as follows:
2 Abstract of Doctoral Dissertation: Commercial Competition
The Preface defines the words used in the title, explains trade restrictions in Islamic
jurisprudence, and clarifies economic principles related to commercial competition, its history
and scope.
Chapter I: Anti-competitive Measures
In this chapter, I researched anti-competitive measures and distinguished them from what may
resemble them. I have also discussed their various manifestations according to Islamic
jurisprudence and the law. There are two broad types of anti-competitive measures:
1) the abuse of monopolistic situations via predatory pricing or other forms of exploitation.
2) anti-competitive agreements, which are also two types: horizontal, also known as cartels,
and vertical which can have both price and non-price restraints.
I compared these issues to Islamic jurisprudence. Then I examined their legal, regulatory,
economic and social effects.
Chapter II: Unfair Competition
In this chapter, I clarified the meaning of unfair competition and distinguished it from what
resembles it, such as parasitic competition (or parasitic imitation), competition prohibited by a
specific law, and competition prohibited due to a non-competition agreement.
Then I examined the various manifestations of unfair competition, whether it be through
"passing off" whereby consumers are tricked into believing that they are buying the product of a
competitor, or through measures used to cause confusion about a rival product or business, or via
trade libel and defamation. I have compared all of the aforementioned issues to the [regulations
of] Islamic jurisprudence.
Chapter III: Fair Competition
In this chapter, I discussed fair competition and the criterion used to distinguish it from unfair
competition. I also discussed the right to fair competition, the systematic nature of that right, and
its proper place. Furthermore, I examined the elements that constitute fair competition, including
those variables related to the firm itself and its ability to compete, those related to how
consumers are persuaded into contracts or trade, those related to the type of contract and its
conditions, and those related to what takes place after the contract via after-sales service. I have
compared all of the aforementioned issues to the [regulations of] Islamic jurisprudence.
Chapter IV: Protecting Fair Competition
In this chapter, I have discussed the economic and trade policies related to protecting
competition, such as price fixing laws, anti-dumping laws, the promotion and protection of
domestic products, and consumer protection laws. I have also discussed the local protection of
competition through the Competition Protection Council in Saudi Arabia, and international
3 Abstract of Doctoral Dissertation: Commercial Competition
protection of competition through the World Trade Organization and the United Nations
Conference on Trade and Development (UNCTAD).
Chapter V: Investigation, Prosecution and Adjudication of Competition Cases
Here I have studied the rules and regulations of investigating competition-related cases, civil
claims, and criminal procedure. I have also researched the body that is authorized to serve as the
adjudicator, in addition to the penalties imposed on violations of competition law. I compared all
of this to Islamic jurisprudence.
I then listed and commented on a number of situations in which rules and regulations related to
competition law violations were applied.
The Conclusion
The conclusion includes a general summary of my research, its results, and recommendations.
The results:
1. Competition, in its general sense, includes praiseworthy acts such as hastening forth to
the bliss of paradise as is mentioned in Allah's statement, "So for this let the competitors
compete" (al-Mutaffifeen: 26). It also includes blameworthy acts, such as rivalry in
desiring this world and being pleased with it, and competition that leads to mutual envy
which the Prophet  forbade in his statement: “Do not compete with each other.”
2. The word "competition" does not carry a specific meaning in Islamic jurisprudence that
makes it different from its lexical meaning.
3. In Saudi Arabian law, the word competition is used when discussing government tenders,
and it is also used when discussing commercial competition, which is the topic of this
research. However, its meaning in commercial law is different from its meaning in
competition law.
4. The law affirms freedom of trade and competition. Therefore, the basic principle is that
competition is legal, or in other words permissible. This is consistent with the position of
many fuqaha (jurists) who hold, as a rule, that all transactions are valid and permissible
until proven otherwise.
There are actions that breach fair competition laws, namely:
(a) practices that restrict fair competition: like those that affect the normal price of
sale, the flow of commodities and services to markets, or the ability to trade. Both
competition law and Islamic law prohibit these practices.
(b) unfair competition, which manifests through practices aimed at attracting
consumers by using deceptive means and defaming rival businesses, all of which
are prohibited by both competition law and Islamic law. One type of unfair
4 Abstract of Doctoral Dissertation: Commercial Competition
competition, according to many commentators, is parasitic competition whereby
one benefits improperly from the efforts made by a competitor.
(c) competition prohibited by law; meaning that certain commercial activity is
prohibited due to a specific law. There are many examples of this in Saudi
Arabian law. I have come to the conclusion that there is nothing Islamically
wrong with preventing certain types of people from doing business, or preventing
business activity in certain instances or places, provided that it be for a general
benefit.
(d) competition prohibited due to a non-competition agreement, such that the noncompetition clause in the agreement is the source of the prohibition. I have
concluded that this type of agreement is invalid in Islamic law.
Some of the recommendations:
1. The laws and policies of Saudi Arabia should be distinguished from the laws of every
other country in the world by explicitly stating that [all its policies and regulations will]
refer back to Islamic shariah.
2. The Competition Protection Council should be a totally independent body (i.e. nongovernmental) so that it can more efficiently perform its functions.
3. There should be a resolution to the present conflict regarding what committee or body has
the authority to enforce competition regulations, who has jurisdiction over competition
disputes, and who has the authority to approve merges and the likes. This conflict exists
between the Competition Law and a number of regulations, especially those set by the
service sector such as the telecommunications and electric companies.
4. There should be a consumer representative on the Competition Protection Council.
5. Every adjudicatory body, including the committee that oversees violations of the
Competition Law, should have an Islamic law specialist.
6. I have suggested that about thirty amendments be made to the Competition Law and its
regulations, in addition to proposing modifications to other policies.
All praises belong and are due to Allah, the Lord of the Worlds, and may prayers and salutations
be upon our Prophet Muhammad, his family and companions.
The Researcher