A recent study by the General Authority for Competition found six indicators of monopolistic practices in the sectors of car sales, after-sales service, and automobile spare parts.

The report showed that exclusive distribution agreements concluded between Original Equipment Manufacturers (OEMs) and local distributors have contributed to creating barriers for entry of new players due to abuse of dominance or preventing competition from reaching the market.

Distributors own several competing brands, which creates the possibility of increasing market power in retail prices or fleet sales prices to achieve a greater market share.

Tampering with fleet bids may have a negative impact on competition conditions, since most fleet sales lack transparency when a large number of sales are agreed upon before the tender process begins.

A dominant position may be misused by OEMs or distributors by voiding the warranty of cars when they are repaired at independent shops, according to the authority. After-sales services generate higher profit margins than car sales, so OEMs and distributors have an incentive to link maintenance services to their approved centers only during warranty periods.

The report indicates that the fifth reason represents in restricting the supply of spare parts to competitors of approved distributors with the original equipment manufacturers, or supplying them at a high price, as well as withholding information about repairs, resulting in an abuse of the dominant position and influencing market competition.

The report revealed the existence of some regulations that create barriers to competition in the market, such as containing procedures that add certain restrictions to the supply of auto parts bearing the manufacturer's mark, and so suppliers could only import from original equipment manufacturers or their distributors, which reduced the number of potential suppliers. In addition, suppliers may not supply original spare parts and alternative spare parts at the same time.