Doing Business In Israel 2017

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Competition Regulation

in Israel: The Law, Recent

Trends and Insights

The main competition legislation in Israel is the Restrictive Trade Practices Law,

5748-1988 (the Antitrust Law). The Antitrust Law provides the legal grounds upon

which the Antitrust Commissioner and the Israel Antitrust Authority (IAA) regulate

restrictive arrangements, merger transactions, monopolies and concentration groups.

The Antitrust Law was enacted in the late 1980s with EU competition law (the

Treaty of Rome) as its primary model and source of inspiration. In the late 1990s U.S.

competition law doctrines and principles began to play a more prominent role in the

implementation of the Antitrust Law by the IAA. This manifested, among others, in a

more liberal approach towards mergers and unilateral conduct.

In 2011 major social unrest broke out, concentrating on the high cost of living which

was attributed to limited competition and weak antitrust regulation. In parallel, a new

Commissioner with amore hawkish viewof competition law, took

a result, the

IAA deviated significantly from principles of U.S. competition law, adopting tougher

positions, which often set worldwide precedents. The most notable example was the

amendment of the Antitrust Law which authorized the IAA to regulate oligopolistic

markets ("concentration groups"), as well as to micro-regulate certain sectors (e.g.,

the Food Law).

Restrictive Arrangements

A restrictive arrangement is defined as any arrangement between business parties

in which at least one of them restricts itself in a way that may decrease competition

in the market, restricts competition between the contracting parties or restricts

competition between any one of them and a third party (the substantive test).

The Antitrust Law further determines that the existence of restrictions relating to

prices, profits, market allocation, or quantity, quality or type of products or services,

renders an arrangement a per se restrictive arrangement regardless of its potential

effect on competition or lack thereof (the per se presumptions).

According to case law, the per se presumptions are normally not applicable to vertical

arrangements (i.e., agreements between parties at different levels of the supply chain

such as supplier-distributor relationships), which are assessed under the substantive

test. Engaging in a restrictive arrangement is illegal unless it has been exempted by

the Commissioner, approved by the Antitrust Tribunal or if it falls within the scope of a

statutory or block exemption. Statutory or block exemptions may apply, among others,

to certain vertical arrangements (e.g., exclusive distribution agreements, IP licensing