Since the Kuwaiti legislator revised the country's competition law in 2021, the Competition Protection Authority (CPA) issued several fines for behavioral antitrust violations. Furthermore, the CPA continued to develop its enforcement practice expanded its investigation capacities. This let to the CPA in late 2023 for the first time imposing fines for violations of the country's merger control regime. Still, in early 2025 the Kuwaiti Constitutional Court challenged the legality of sanctions imposed under the Kuwaiti Competition Law. This client brief explores recent enforcement activities practiced by the CPA, and the impact of the Constitutional Court's ruling, along with anticipated legislative changes, which underscore the growing emphasis on aligning enforcement practices with constitutional principles.
Gun jumping and failure to notify
Failure to notify or suspend transactions that require notification under the Kuwaiti merger control regime may be subject to fines or additional sanctions. Fines are capped at 10% of the annual turnover of the violating parties. In case of repeat offenses, the cap is doubled. The Competition Law does not address whether fines will be calculated based on domestic or worldwide turnover and the CPA so far has declined to clarify the matter.
In late 2023, the CPA for the first time ever imposed fines for failing to notify the CPA prior to closing a notifiable transaction. The CPA fined the relevant parties 5% of their annual turnover. The CPA did not publish their decision in this cases. Instead, the fines were only briefly referenced in the report on the CPA's activities in 2022 and 2023. The parties challenged the CPA's decision in court. The court sided with the CPA and upheld the fines.
Behavioral antitrust enforcement
Enforcement action against behavioral antitrust violations has been much for frequent. In late 2022, the CPA for the first time sanctioned a business for violations of the Kuwaiti Competition Law. They fined a Kuwaiti steel manufacturer in the amount of 1% of their annual turnover for failing to comply with request of the CPA related to their investigation into the reinforced steel sector. Subsequently, in May 2023, the CPA imposed fines of between 1 and 5% of annual turnover against several Kuwaiti supermarkets, for abuse of dominance (for further information on the CPA's prior enforcement practices, please see our client brief Kuwaiti Competition Protection Agency Issues First Penalties).
Subsequently, the CPA published further enforcement action in their 2022-2023 and 2023-2024 activities reports. In their 2022-2023 report, the CPA disclosed that they took enforcement action in 19 cases. However, they did not provide meaningful details on the cases. They limited information to the sectors concerned. In their 2023-2024 report the CPA omitted even these limited details and only stated that they imposed fines in 21 cases for behavioral antitrust violations.
Intervention of the Constitutional Court
In early 2025, the Kuwaiti Constitutional Court ruled on a case challenging the constitutionality of Art. 34(1) Kuwaiti Competition Law, which establishes the CPA's authority to impose financial penalties on undertakings found in violation of behavioral antitrust provisions of the Competition Law. The Constitutional Court found this provision to be unconstitutional due to the lack of proportionality between the penalty, the violation, and the associated gain. Specifically, the Constitutional Court found that:
- Art. 34(1) does not require the CPA to assess the actual harm caused by the violation or the profit gained from the anti-competitive conduct when determining the penalty and thus violated the principle of proportionality;
- Art. 34(1) applies uniformly to minor and severe violations, which again violated the principle of proportionality;
- penalties are calculated based on the violating party's turnover achieved from all its activities, even those unrelated to the violation, making it a disproportionate financial burden;
- the penalties pursuant to Art. 34(1) constitute an unjust confiscation of property and fail to adequately protect private rights in violations of the constitutional protections of private ownership; and
- by failing to provide clear and transparent standards transparency for enforcement, Art. 34(1) hampers an undertaking's ability to assess or predict the legal consequences of their conduct, undermining fundamental procedural fairness.
Consequently, the Constitutional Court declared Art. 34(1) to be unconstitutional in tis current form. The Constitutional Court's decision essentially deprives the CPA from taking enforcement action against behavioral antitrust violations of the Competition Law and raises doubts about the enforceability of the previous penalties issued under Art. 34(1). Pursuant to Art. 6 Constitution of Kuwait judgements of the Constitutional Court apply retroactively. Hence, fines imposed by the CPA for behavior antitrust violations pursuant to Art. 34(1) Competition Law should be considered as null and void following the Constitutional Court's decision
Furthermore, the judgment raises doubts about the constitutionality of other penalty provisions in the Competition Law, specifically Art. 34(2) Competition Law, which authorizes the CPA to impose penalty of up to 10% of annual turnover for failure to notify the CPA of an economic concentration and gun jumping. The Constitutional Court's reasoning in striking down Art. 34(1) could equally be applied Art. 34(2).
In the wake of the Constitutional Court's decisions the Kuwaiti legislator indicated that they may address the issue by amending the Competition Law and vesting the authority to impose fines for violation of the law with the competent courts rather than the CPA. Whether this would suffice to remedy the constitutional concerns raised by the Constitutional Court remains to be see. Furthermore, it is unclear how this shift in authorities would affect the CPA's investigative abilities. Companies with activities in Kuwait should monitor these developments to adequately assess their risks related to antitrust and merger control compliance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
