Israel: national competition law regime and how it affects multinationals

In summary

The Economic Competition Law 5748-1988 aims to decrease the regulatory burden for legitimate and efficient practices while strengthening enforcement against anticompetitive conduct. The Israeli Parliament recently approved an amendment to the Israeli merger regulations. Also, the Israeli Competition Authority published its policy that the limitations of the Law also apply to global companies operating in Israel. Finally, the Israeli courts rendered important rulings on the extraterritorial application of the Law in the context of international cartels.

Discussion points

• Restrictive arrangements control regime
• Merger control regime and amendments to the thresholds and forms
• Monopoly control regime and concerted group control regime
• Enforcement measures under the Law and private enforcement
• Pro-competitive developments

Referenced in this article

• Economic Competition Law 5748-1988 and its Regulations
• ICA policy paper on cooperation between competitors in a tender
• ICA draft policy paper on Resale Price Maintenance (RPM) arrangements
• ICA Facebook hearing for not reporting mergers
• ICA and Taboola.com Ltd and ICA and Ynet consent decrees
• ICA hearing with respect of MBI Pharma for excessive pricing
• RLFI agriculture Ltd v Man Trucks and Bus AG et al; Zalicha v Tnuva
• Proposed amendment to the law regarding parallel import

The Economic Competition Law 5748-1988 (the Law) ^[1] is the primary law dealing with competition and antitrust issues in Israel. Its objective is to prevent harm to competition or to the public. The Law contains the substantive rules that apply to various restrictive trade practices (restrictive arrangements, mergers, monopolies and concerted groups).

The Law encompasses rules concerning the structure and the powers of the Israeli Competition Authority (ICA), ^[2] the Director General of the ICA (the Director General) and the Competition Tribunal (the Tribunal), as well as the procedural rules that apply to cases brought before each of them.

Recent years have been characterised by:

• trends to strengthen the position of the ICA and increase administrative enforcement; criminal enforcement;
• the ICA’s focus on its advisory capacity within the government;
• the expansion of block exemptions to allow parties to move forward towards a regime based on self-assessment rather than regulatory permits;
• the ICA’s policy that Israeli consumer would not be inferior to other consumers worldwide, for example, regarding technology and digital economy aspects; and
• increasing civil follow-on class actions against international cartels.

Restrictive arrangements control regime

Definition

Section 2(a) of the Law defines a restrictive arrangement as an arrangement between persons (including legal entities) conducting business, according to which at least one of the parties restricts itself in a manner that might prevent or reduce competition between the person and the other parties to the arrangement, or any of them, or between the person and a third party. Section 2(b) of the Law also provides conclusive presumptions that an arrangement involving a restraint will be deemed to be a restrictive arrangement if it relates to:

• the price to be demanded, offered or paid;
• the profit to be obtained;
• market allocation; or
• the quantity, quality or type of assets or services in the business.

In general, a restrictive arrangement is prohibited under the Law, unless it is permitted in accordance with the Law. Section 4 of the Law establishes that parties to a restrictive arrangement can receive an approval from the Tribunal if it finds that the arrangement is in the public interest, ^[3] or it can be exempted by the Director General at the request of a party to a restrictive arrangement and following consultation of the Director General with the Exemptions and Mergers Committee. The Director General considers whether the restrictive arrangement considerably reduces competition or causes substantial harm to competition, whether the objective of the arrangement is to reduce or eliminate competition, and whether the restraints in the arrangement are necessary to fulfil the objectives of the arrangement.

A similar provision is set forth in section 15A(a) as a condition to the authority of the Director General to determine a block exemption rule. To assist parties to restrictive arrangements in evaluating the effect of a certain arrangement, the ICA published a public statement on the interpretation of sections 14(a)(2) and 15A(a)(2) of the Law. The statement provides clarification that not only do the parties need to indicate that there is no significant harm to competition or that there is no harm to competition in a significant part of the market, but they are also required to indicate that the arrangement between the parties has a legitimate purpose and that the restraints are necessary to fulfil the legitimate purpose of the arrangement. In essence, the ICA broadened the block exemptions and included a self-assessment regime. Accordingly, in recent years, restrictive arrangements are rarely evaluated under section 14 of the Law by the ICA.

With regard to the extraterritorial application of the restrictive arrangement control regime, the ICA applies the ‘effects doctrine’ to acquire extraterritorial jurisdiction over restrictive arrangements, including cartels executed outside Israel that harm competition in Israel.

Statutory exemptions

A statutory exemption may also apply to certain arrangements that, among other things, involve restraints that are established by law, relate to specific business sectors (eg, agricultural, international air or sea transportation) or involve restraints relating to intellectual property rights.

Block exemptions

Section 15A of the Law grants the Director General the power to establish block exemptions. By publishing block exemptions, the Director General essentially exempts parties to a restrictive arrangement from seeking a specific exemption from the Director General or the approval of the Tribunal, subject to the fulfilment of the terms of the various block exemptions.

In recent years, the ICA has published various block exemptions, including for:

• syndicated loans and restrictive arrangements causing de minimis harm to competition;
• joint ventures;
• research and development agreements;
• exclusive dealing;
• exclusive distribution or franchise;
• non-horizontal arrangements; and
• joint ventures for the marketing and supply of security equipment in foreign countries.

Recent developments in the restrictive arrangement regime

In July 2021, the block exemption for non-horizontal arrangements was amended, so that it no longer excludes arrangements that contain price restrictions. In the explanatory notes of the draft amendment to the block exemption, the ICA explained that even though resale price maintenance (RPM) arrangements could harm competition under certain circumstances, there could be pro-competitive justifications for these arrangements, including increased competition between brands and, as a result, increased social welfare.

However, following the above-mentioned amendment, in January 2022, the ICA published a draft amendment to the policy paper regarding RPM arrangements, so that it would accord with the self-assessment conditions in the block exemption for non-horizontal arrangements. Among other things, the ICA held that, in general, minimum RPM arrangements should not be allowed unless the market features indicate a strong degree of competition, and only for the purpose of achieving a clear and proven pro-competitive benefit.

In July 2021, the ICA also published a policy paper, according to which cooperation between competitors in entering tenders involving the supply of products or services, or tenders for a project, is considered a restrictive arrangement, whether the joining is in the tender itself or in the preliminary stages (eg, PQs). Considerations for an exemption from the obligation to obtain an approval for the restrictive arrangement include, among other things, the number of participants in the tender, the level of similarity between the competitors, the effect on competition and pro-competitive aspects of the cooperation.

Merger control regime

Definition

The Law defines the term ‘merger of companies’ broadly by providing a non-exhaustive list that includes the acquisition of a company’s main assets by another company or the acquisition of shares in a company by another company by which the acquiring company is accorded more than a quarter of the nominal value of the issued share capital, or of the voting power, or the power to appoint more than a quarter of the directors, or participation in more than a quarter of the profits of the company. The acquisition that may be direct or indirect or by way of rights accorded by contract.

Owing to the broad definition of merger under the Law, even the acquisition of less than a quarter of any of the above-mentioned rights may constitute a merger, under certain circumstances.

Mergers involving foreign parties

The Law will apply to a merger involving a foreign party if at least two of the merging parties meet the conditions of the nexus test, set forth in the ICA’s Merger Guidelines (the Guidelines), namely:

1. the foreign company is registered in Israel, in which case the Law applies explicitly;
2. the foreign company has a ‘merger affiliation’ with an Israeli company; or
3. the foreign company maintains a place of business in Israel (ie, if it holds significant influence over the conduct of a local representative).

In respect of point (2), according to the Guidelines, a merger transaction between a foreign company (affiliated with an Israeli company) and an Israeli company creates an indirect merger between the two Israeli companies. The Guidelines provide that when a foreign company holds more than a quarter of any of the above-mentioned rights in an Israeli company (ie, the nominal value of the issued share capital, the voting power or the power to appoint more than a quarter of the directors or participation in more than a quarter of the profits), it will be viewed as a party to any merger transaction involving the foreign company.

Thresholds for filing

The Law requires all merging companies to file a merger notification with the ICA when at least one of the following thresholds set under the Law is met:

• the aggregate sales turnover of the parties to the merger is greater than 367.93 million shekels in the fiscal year preceding the merger and the sales turnover of at least two of the merging companies exceeds 20 million shekels, in which case the parties will be required to receive advance approval from the Director General; or
• as a result of the merger, the combined market share (in any market) of the merging companies in the total supply or acquisition of particular goods or similar goods, or the provision or acquisition of a particular service or a similar service, exceeds 50 per cent of the market; or
• one of the parties has a monopoly (ie, holds more than 50 per cent of the total supply or acquisition in a certain market in Israel, which may be either a product or a service market, including markets not relevant to the transaction); however, according to the Law, while ‘significant market power’ is sufficient for establishing a monopoly, it will not be considered a trigger for the submission of notices of merger to the ICA unless the 50 per cent market share threshold is met.

The market share and turnover calculations must take into consideration all the entities controlling or controlled by each party.

The requirements set forth above apply solely with regard to a company’s turnover and market share in Israel.

Merger evaluation process

The Law provides that the Director General is required to notify the merging companies of his or her decision in respect of the merger within 30 days of the date on which the completed notification forms were received from all the merging parties.

A time extension may be granted to the Director General without the need to request the consent of the parties to the merger or without the need to approach the Tribunal. He or she is permitted to extend the timeline for the evaluation of a merger transaction (30 days) by two additional 30-day periods and to extend the evaluation period by an additional 60 days after consulting with the Exemptions and Mergers Advisory Committee. Thus, cumulatively, the Director General has up to 150 days to review a merger transaction.

As a practical matter, when cross-border merger transactions require approval in multiple jurisdictions, the ICA will sometimes consider the decisions made by other authorities in different jurisdictions (primarily the US Federal Trade Commission, the US Department of Justice, the UK Competition and Markets Authority and the European Commission) if there are no unique circumstances concerning the Israeli market. It is also possible that parties in those circumstances waive their right to confidentiality in respect of the information provided to competition authorities, to enable the ICA to seek information from those authorities in respect of the merger.

The Director General is mandated to object to a merger of companies, or to stipulate conditions for the merger, if he or she finds that there is reasonable likelihood that, as a result of the merger, competition in the relevant sector would be significantly harmed or that the public would be harmed by:

• the high price level of an asset or a service;
• the low quality of an asset or of a service; or
• the available quantity of the asset, the scope of the service supplied, or the constancy and conditions of supply.

Recent developments in the merger control regime

In March 2022, turnover filing threshold for mergers were updated so that the minimum sales turnover threshold for filing merger notices of at least two of the merging companies increased to 20 million shekels instead of 10 million shekels.

In addition, commencing from May 2022, the merger notice forms that the parties to a merger are required to file with the ICA were changed and replaced by one uniform form to be submitted for all merger types (including mergers that are not horizontal, vertical or complementary). The new form is much more comprehensive than the forms that the parties previously had to submit, and requires a significant amount of additional information. In the new form, the parties are required to provide the ICA with extensive and detailed information on their activities, their holding structures (including the ultimate controlling shareholder) and on the transaction. In addition, a new definition of ‘conglomerate merger’ is provided in the new form, so that it refers to a merger between companies that manufacture, market, distribute or supply complementary products. The new forms were binding as of 20 May 2022.

In January 2022, the ICA published a call for public comments regarding the analysis of conglomerate mergers and the aspects that should be considered. In the call, the ICA explained that while many conglomerate mergers do not raise any competitive concerns, recently there has been an increase in theories about harm to competition that may occur due to such mergers (which mainly include physical or economic tying practices and the market power of one of the parties).

In May 2021, the ICA notified Facebook that it is considering imposing an administrative fine of 6 million shekels on Facebook, as, according to the ICA, it did not file notices of merger in two acquisitions of Israeli companies (RedKix and Service Friend), which it carried out in 2018–2019. According to the ICA, the transactions should have been reported, due to Facebook’s monopoly status in Israel.

In March 2021, the ICA reached a consent decree with Taboola.com Ltd (online advertising), to pay 5 million shekels to the state treasury. It was discovered that Taboola was involved in drafting a letter by Ynet (a news website and customer of Taboola) supporting the merger between Taboola and Outbrain, when previously Ynet had presented an opposing position to the ICA on the merger. In June 2021, the Central District Court approved the consent decree. In addition, in August 2021, the ICA reached a consent decree with Ynet, to pay 1 million shekels to the state treasury, due to its involvement in this case.

Monopoly control regime

Definition

According to section 26(a) of the Law, the definition of monopoly is any of following:

• the concentration of more than half of the total supply or acquisition of an asset, or more than half of the total provision or acquisition of a service, in the hands of one person (or entity); or
• anyone who has significant market power in relation to the supply or purchase of an asset or service (even if the person or entity does not hold a market share of more than 50 per cent).

Under the current regime, the declaration of a monopoly by the Director General is of declaratory validity only, meaning that a monopoly is a matter of status; therefore, the obligations and limitations applied to a monopoly owner exist regardless of the Director General’s declaration or lack thereof.

Limitations

In general, a status of monopoly is not prohibited. Nonetheless, monopolists must abide by several strict standards of conduct; namely, a monopoly owner may not:

• unreasonably refuse to deal (supply or purchase) goods or services in a market in which it holds a monopolistic market share; or
• act in a manner that constitutes abuse of its dominant position in the market, in a manner likely to reduce competition in business or harm the public.

An abuse of a dominant position by a monopoly owner includes, among other things:

• charging unfair prices for products or services;
• reducing or increasing the quantity of products or services that the monopoly owner offers in a manner that is not in the framework of a fair competitive action;
• applying dissimilar contractual conditions to similar transactions, which might grant certain customers and suppliers an unfair advantage over their competitors (discrimination); and
• subjecting a transaction with regard to an asset or service of the monopoly to conditions that are unrelated to the subject matter of the transaction (tying).

In this regard, the Director General has the authority to supervise and instruct the monopolist in its business activities to ensure that its behaviour, or that the mere existence of a monopoly, does not harm competition in the market or the public.

The Tribunal may, upon application by the Director General, instruct the monopolist to sell an asset in its possession if it has found that this may prevent harm or the risk of significant harm to competition or to the public.

Recent developments in the monopoly control regime

In November 2021, the Director General notified MBI Pharma that it was considering imposing an administrative fine of 8 million shekels on it, and individual fines of 614,450 shekels on each of its two officeholders. The ICA found that MBI Pharma was a monopolist in the supply of a certain medication for an incurable disease in Israel, and that it set an excessive price for it. The price that MBI Pharma set was, according to the ICA, hundreds of times higher than the price of medication that was used for the same purpose until a few years before. This is the first time that the ICA has initiated administrative fine proceedings against a monopolist that allegedly abused its position by setting an excessive and unfair price.

In June 2020, the Attorney General of the State of Israel (AG) submitted a position paper with the Supreme Court in which the AG set out his position on how the Court should best approach an excessive pricing claim. The position was submitted in the framework of a motion for leave to appeal a district court’s decision to certify a class action against Coca-Cola’s Israeli bottler, the Central Bottling Company.

While recognising the existence of an excessive pricing claim under the Law, the AG argued that the Court should exercise caution and restraint in those claims and set out the following two-stage test to determine whether there was a breach of the Law: first, the Court should examine whether a price was excessive compared to what would otherwise be charged in a competitive market; and second, it should be examined if the price was unfair.

Concerted group control regime

Definition

According to the Law, the Director General may determine that a limited group of persons conducting business and possessing a concentration of more than half of the total supply or acquisition of an asset or provision or acquisition of a service constitutes a concerted group, if the Director General determines that all the following conditions are met:

• there is limited competition or there are conditions for limited competition between the group’s members or within the market in which they operate; and
• instructions imposed by the Director General are expected to prevent significant harm or concern for harm to competition in the market or to the public or may significantly strengthen competition or may create conditions for significant improvement of market competition.

In addition, the Law lists several barriers to entry to a market. A combination of two or more of those barriers is regarded as a condition for limited competition.

The determination of a concerted group by the Director General has a constitutional validity.

Implications

The Director General may order a concerted group to take steps that will prevent harm or concern for harm to competition, or to the public, or steps that are expected to significantly increase the competition between the members of the concerted group or create conditions for such an increase.

In addition, the Tribunal, upon the request of the Director General, may order the sale of holdings (entirely or partly) of members of the concerted group under certain circumstances.

Enforcement

Any violation of the Law has criminal, administrative and civil consequences.

Criminal enforcement

In general, all the provisions of the Law are criminal offences. However, criminal sanctions are not often imposed and are reserved, mostly, for significant violations of the Law (eg, cartels or bid rigging). Nonetheless, in the coming years, an increase in criminal enforcement alongside greater sanctions – owing to developments of the Law and the ICA’s influence – is expected.

Recent criminal enforcement

In September and December 2021, the Jerusalem District Court imposed prison sentences of five-and-a-half months and seven months, following plea agreements regarding a computerisation cartel case, where two of the accused were convicted of involvement in the coordination of competitive procedures for the purchase of computer products by Israel Aerospace Industries. In its decision of September 2021, the court held that the starting point for sentencing for violation of the law must be prison sentences with actual time served. In addition to the prison sentences, the accused were fined sums of 100,000 shekels and 45,000 shekels.

Responsibility of a corporation

An independent duty is imposed on officers in a corporation to supervise and do everything possible to prevent any violation of the Law by the corporation or its employees (the supervision duty). A violation of the supervision duty may result in the imposition of a criminal sanction of imprisonment for up to one year and a fine.

It is also established that if the corporation or a corporation’s employee carries out an offence, then there will be a presumption that the officer breached the supervision duty, unless the officer proves that he or she did everything in his or her power to fulfil the supervision duty.

Maximum fine

The maximum fine against a person in a criminal procedure is approximately 2.26 million shekels for every violation of the Law and an additional fine of up to approximately 14,000 shekels for each day the offence continues. In the case of a company, the fine or the additional fine is doubled.

Maximum punishment

The maximum punishment for an individual is three years’ imprisonment or, if the offence has been committed under aggravated circumstances, up to five years. Aggravating circumstances include factors that are likely to harm competition. The maximum criminal penalty for the offence of a restrictive arrangement is five years’ imprisonment, without the need to establish aggravating circumstances.

Leniency programme

The ICA’s leniency programme provides that every person, including a corporation, a director or an employee of a corporation, will be granted full immunity from criminal prosecution relating to a restrictive arrangement offence, if it is the first to come forward to the ICA and provide all information known to it in connection with the restrictive arrangement to which it was a party. The leniency programme is not considered to be successful in Israel as it has only been applied a few times since its initiation.

Administrative enforcement

Administrative determination (decision)

The Director General may issue an administrative determination declaring that a certain violation has occurred. The Director General’s determination serves as prima facie evidence in court.

Administrative fines

For every violation of the Law, the Director General may impose administrative fines of up to 8 per cent of the sales turnover of a corporation’s revenue in the year preceding the violation. The maximum amount that can be imposed shall not be greater than approximately 102 million shekels (for each violation). For individuals or corporations that, in the year preceding the violation, had a sales turnover of less than approximately 10 million shekels, the Law sets a maximum fine of approximately 1.05 million shekels.

The Law contains a non-exhaustive list of circumstances and considerations for the Director General to weigh when determining the amount of the administrative fines to be imposed, including:

• the duration of the offence;
• the harm that the offence was liable to cause to competition or to the public;
• the offender’s share in the offence and its level of influence over its commission;
• the existence or absence of prior offences and the date of their commission; and
• actions taken by the offender to prevent repetition of the offence or to terminate the offence, including reporting the offence on its own initiative, or actions taken to repair the effects of the offence.

In addition, the ICA published a public statement with additional clarification on calculating the amounts of fines. It also published guidelines to clarify when it will impose administrative fines as the primary enforcement measure (instead of seeking criminal sanctions). This includes, among other things, non-horizontal restrictive arrangements, gun-jumping violations, information exchange of non-secret information, abuse of dominant position and failure to comply with requests for information.

Recent administrative enforcement

In June 2021, the ICA announced its intention to impose an administrative fine of seven million shekels on Makita’s Israeli importer, and to impose individual fines ranging from 360,000 to 450,000 shekels on three of its officeholders.

An examination carried out by the ICA indicated that Makita’s importer imposed minimum resale prices for consumers on retailers, and acted to increase the prices for consumers of Makita’s products.

Consent decree

The Law authorises the Director General and third parties to agree to a consent decree that provides for, among other things, an amount of money to be paid to the State Treasury in lieu of other enforcement measures.

Private enforcement

Class actions

Any violation of the Law is deemed a tort under the Torts Ordinance (New Version) 5728-1968. The Class Action Law enables the submission of a motion to certify class actions in antitrust cases.

In recent years, an increasing number of motions to certify class actions based on alleged global cartels have been filed with the Israeli district courts. The typical petitioners in those cases are Israeli private consumers or private consumer organisations, and the respondents are global companies that allegedly were parties to (alleged) global cartels.

Often, the trigger for private enforcement in the past was based on criminal or an administrative enforcement action taken by the ICA. However, the new trend has seen more enforcement actions taken by competition authorities in other countries, as well as copying class actions initiated worldwide. Other motions to certify class actions are based on claims against monopolists regarding excessive pricing.

Recently, Israeli courts have rendered ground-breaking decisions that have the potential to significantly effect the follow-on class actions based on alleged global cartels:

In a recent decision in the Trucks case, the District Court deliberated on the extraterritorial application of the Law and held that to apply the effects doctrine – through which the Law can be applied extraterritorially under certain circumstances – the applicant must establish that the restrictive arrangement had a significant, direct and deliberate effect on competition in Israel and that demonstrating a negligible and incidental effect was not sufficient. An appeal of this decision was submitted to the Supreme Court of Israel, in the framework of which, a position paper was submitted by the AG, stating that the Law applies to conduct that has a significant, direct and foreseeable impact on competition in Israel and does not require an element of intent. In October 2021, the Supreme Court held that at the current stage of the case – the document discovery stage – it was not necessary for the Court to render a decision on the application of the effects doctrine. However, the Supreme Court held that the decision of the European Commission, together with the significant market share of the respondents’ trucks in Israel, constituted an initial evidentiary foundation that was sufficient for the document discovery stage. The Court emphasised that it was sufficient initial evidence, inter alia, due to the inherent difficulty of exposing prohibited connections between large companies, especially when they acted outside of Israel. Therefore, the appeal was allowed in part, and the hearing was sent back to the District Court.

On the other hand, in a decision to grant motions to dismiss (in the LIBOR case), that was rendered before the Supreme Court rendered its decision in the appeal regarding the Trucks case, the judge referenced the District Court’s decision in the Trucks case and affirmed the court’s holding in that decision, that if harm to competition in Israel was not substantial and direct, the effects doctrine should not be applied. The judge further held that it is necessary to examine with great caution motions for importing to the courts in Israel, which in any event are overloaded, global issues that are being adjudicated in foreign courts and where enormous costs have been imposed on the defendants along with criminal sanctions with significant implications. An appeal on this decision is pending before the Supreme Court.

In December 2021, the District Court in Jerusalem rejected two class actions brought against Tnuva, an Israeli food manufacturing and marketing company, which alleged that Tnuva was a monopolist that allegedly abused its position by setting an excessively unfair price on certain dairy products (white cheese and two kinds of sweet cream). The Court held that the examination of an excessive unfair pricing claim is a two-stage test in which it first had to evaluate whether the price of the product was higher by a significant gap compared with the market price. Only if the answer is positive, should the court determine whether the price was fair. In the Tnuva case, the court held that EBIT of 24 per cent, 27 per cent and 32 per cent did not establish the grounds of excessive pricing. The Court added that it doubted whether a class action was the appropriate method to determine the fair price of a product. The Israeli Supreme Court is expected to shed light on excessive pricing claims during Q2 2022.

Pro-competitive developments

The past couple of years have seen many significant and influential developments in Israeli competition law and in the enforcement authorities of the Director General. For example, the ICA has published a call for comments on the promotion of regulation between providers of online intermediation services and business users, pursuant to relevant European regulations. This is consistent with the Director General’s approach, expressed on several occasions recently, that Israeli consumers are entitled to at least the same standards established for foreign consumers.

In addition, the Privacy Protection Authority, the ICA and the Consumer Protection and Fair Trade Authority recommend the adoption of the right to data portability in Israeli law.

In the past few months, the Minister of the Economy and Industry has been advancing a proposed amendment to the law, which is aimed at protecting competition that stems from parallel import. The proposed amendment aims to prevent harm to competition caused by actions of direct importers that could reduce or prevent competition arising from parallel import. The proposed amendment, inter alia, would prohibit direct importers from acts that could result in harm to parallel or individual import, which could harm the competition in the relevant sector. In addition, it is proposed to add a prohibition on direct importers from doing anything whose principal objective is to prevent or reduce competition from parallel or individual import that is not necessary for the essence of the importation. In contrast to the first prohibition under the proposed amendment, in the second prohibition, the essence of a direct importer’s act would be evaluated, without evaluating the substance of the possible result of the act on competition in a given sector.

For violations of the above-described proposed prohibitions, the Director General would be able to impose administrative fines of up to 8 per cent of the sales turnover of a corporation’s revenue in the year preceding the violation. The maximum amount that can be imposed shall not be greater than approximately 102.1 million shekels.

It is proposed that the amendment would be in force as a temporary order for six years.

The Food Law

The Food Law, enacted in 2014, deals primarily with vertical relationships between food suppliers and retailers and regulates the commercial relationships between them. The Food Law imposes criminal, administrative and civil liability on corporations and their officers. The Law also empowers the Director General to instruct a large retailer that is selling the products of a large supplier in respect of sale slots and to give instructions to a retailer that is selling private label products.

The Concentration Law

The purpose of the Concentration Law, enacted in 2013, is to reduce economy-wide market concentration and to promote competition in various sectors of the Israeli economy. The Concentration Law poses limitations on, among other things, cross-holdings in a significant non-financial entity with a significant financial entity and the control of public corporations through a pyramidal ownership structure. The Concentration Law also requires consultation with the Director General regarding, among other things, the advancement of competition in a specific sector.

The ICA’s advisory capacity

In addition to its role as a regulator and enforcer, the ICA performs competitive market analysis of various sectors and advises other regulators. In recent years, it has published reports on, among other things:

• information gaps in the Israeli mortgage market;
• the connection between the price of a car to the price of its spare parts;
• P2P payment applications and the network effect that was created in this field; and
• the effect of financial incentives on sales of agents in the health insurance market.

Notes