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The Promotion of Competition and Reduction of Concentration Law, 5774-2013
deals with three main areas: mandating that considerations relating to competition
and concentration be taken into account in the allocation of public assets (e.g.,
concessions and licenses granted by the government); a prohibition on multi-layered
corporate holding structures; and the separation between financial and non-financial
assets. The law is of increasing importance in public tenders.
The Promotion of Competition in the Food Sector Law, 5774-2014 (the Food Law),
was enacted to increase competitiveness in the food sector and reduce product
prices. It prohibits, limits and regulates certain practices that could potentially be
used by major suppliers or retailers to limit competition. Additionally, it empowers
the Commissioner to intervene when retail markets are geographically concentrated.
Firms in the sector must be well acquainted with the Food Law and with the IAA's
interpretive guidelines, as violation of the law may have severe criminal, administrative
and civil implications.
Other developments and trends
Administrative Enforcement
As of 2012, the Commissioner is empowered to impose financial sanctions for a wide
range of offenses, all of which are also subject to criminal enforcement, as well as
other administrative measures. The IAA's current policy is to generally prefer financial
sanctions over criminal enforcement for non-cartelistic offences such as illegal
vertical arrangements, abuse of dominant position and failure to comply with data
requests. The IAA recently released draft guidelines on the methodology to be used
by the Commissioner in calculating financial sanctions.While the methodology is quite
complex, the most critical factor affecting the level of payment is the likely effect of
the offence on competition.
In 2014, the IAA published guidelines on its enforcement policy regarding excessive
pricing, establishing that the IAA views excessive prices by monopolies, under certain
conditions, as illegal unfair pricing. The guidelines, which are contrary to the IAA's
previous practice, were contentious from the outset, and are now being formally re-
evaluated by the Commissioner following difficulties in their implementation.
Private Enforcement
In recent years there has been a significant increase in private enforcement of
competition law, most notably – by way of class actions. In the past two years alone,
about a dozen class actions have been filed on excessive pricing grounds, one of which
was recently certified as a class action by the Central District Court relying in part on
the excessive pricing guidelines which are now undergoing re-evaluation.
Civil claims filed by indirect purchasers against alleged international cartels are also on
the rise. Israel's class action jurisprudence in such cases is in its infancy. The outcomes
of these cases are likely to be standard-setting.
Firms in the sector must be well acquainted with the Food Law and with the
IAA's interpretive guidelines, as violation of the law may have severe criminal,
administrative and civil implications.