Global Competition Law is primarly a practitioner's guide presenting the most salient aspects of the major competition laws country by country, giving an overview of their structure and most charasteristic elements.
Global Competition Law also provides insight into possible future developments in the field.

Global Competition Law

A negative clearance procedure for restrictive arrangements is provided by Sections 7 to 16 of the 1988 Act. That procedure falls within the jurisdiction of the Competition Tribunal (Section 9), which must hear the position of the ICA General Director (Section 8a). The application for exemption is published in the Official Gazette. Within 30 days of said publication, any person likely to be injure …

Exemptions

Section 4 of the 1988 Act prohibits being “party to a restrictive arrangement, in whole or in part”.

Section 2 defines a restrictive arrangement as:

“[...] an arrangement entered into by persons conducting business, pursuant to which at least one of the parties restricts itself in a manner likely to prevent or reduce competition in the marketplace between it and the other parties to the arrangement, or any of them, or between it and a person not party to the arrangement”.

The Act also specifies a list of arrangements deemed to be restrictive arrangements: arrangements on the price to be demanded, offered or paid; on the profit to be obtained; on market allocation; on the quantity, quality or type of assets or services in the business.

Following a Supreme Court judgment which ruled that vertical arrangements, including minimum Resale Price Maintenance (RPM), should not be prohibited per se but be assessed according to their impact on competition (Supreme Court, 10 August 2015, Shufersal), the Competition Authority published in January 2017 a policy draft document announcing a shift of its policy towards RPM agreements. Where the document becomes final, RPM arrangements between suppliers and a retailers will be considered a restrictive arrangement, unless: (i) the arrangement does not undermine competition in a specific market (for example, when there is strong inter-brand competition, and the arrangement does not facilitate a coordinated equilibrium); and (ii) the purpose of the arrangement is to achieve clear pro-competitive benefits (such as encouraging retailers' investment in product promotion through providing accompanying services, when required according to the nature of the product and the inter-brand competition).

Moreover, an amendment to the Economic Competition Law dated 17 July 2018 granted the Competition Authority, for a period of three years, the power to protect parallel imports against practices implemented by exclusive importers to prevent the import of goods in Israel by unauthorized resellers.

Pursuant to the Competition Authority General Director's Block Exemption for Arrangements of Minor Importance of 2006, agreements which cause only negligible harm to competition are exempt from the requirement of obtaining approval from the Competition Tribunal, if they satisfy all the conditions set out in the Rules. Agreements are deemed to cause only negligible harm to competition if the aggregate market share of all the parties in the product market does not exceed 10% of the market - if the agreement is between competitors - and if such aggregate market share does not exceed 15% of each of the product markets to which the agreement relates - if the agreement is between parties who are not competitors. However, the exemption will not apply to agreements in which a party holds a monopoly in the market for a tangential product; or to agreements to purchase a right in a competing corporation, other than a public company whose shares are offered to the public, where such purchase has not transformed the purchaser into an interested party in such company, under the Securities Act 1968. Likewise, the exemption is not applicable to agreements whose main objective is the limitation or elimination of competition; or to agreements that include restrictions that are not necessary for the purpose of carrying out their main aim.

Section 3 of the Act deals with “Arrangements which are not restrictive”. Many practices are excluded from the application of competition Act, such as:

- arrangements involving restraints established by Act;

- arrangements involving the use of intellectual property rights;

- arrangements involving the use of real property rights;

- arrangements in the field of raw agricultural products;

- arrangements entered into by a company and its subsidiary;

- non-compete obligations on the seller of a business towards the purchaser of the business;

- arrangements between trade unions and employers' associations relating to the employment of workers and to working conditions.

Until the November 2014 amendments to the Restrictive Trade Practices Act, reciprocal exclusivity arrangements between the purchaser of an asset or service and its supplier were also exempted under Section 3 provided that both the supplier and the purchaser were not engaged in the production of such assets or the provision of such services. Such arrangements are now subject to an assessment of their anticompetitive effects by the ICA. The aim of the amendment is to encourage imports and lower the cost of living.

The prohibition

A negative clearance procedure for restrictive arrangements is provided by Sections 7 to 16 of the 1988 Act. That procedure falls within the jurisdiction of the Competition Tribunal (Section 9), which must hear the position of the ICA General Director (Section 8a). The application for exemption is published in the Official Gazette. Within 30 days of said publication, any person likely to be injured by the restrictive arrangement, any industry association, and any consumers' organization may submit a written objection to the Tribunal (Section 8b).The Tribunal, must take into account public interest considerations when issuing its decision. Pursuant to Section 10, such considerations include:

"(1) Efficiency in the production and marketing of assets or services, assurance of their quality, or reduction in their price to the consumer;

(2) Assurance of a sufficient supply of assets or services to the public;

(3) Prevention of unfair competition by a person not party to the arrangement, which may result in a reduction in competition for the supply of the assets or services in which the parties to the arrangement are engaged;

(4) Enabling the parties to the arrangement to obtain the supply of assets or services on reasonable terms from a person who controls a considerable share of the supply of such assets or services, or to supply assets or services on reasonable terms to a person who controls the purchase of a considerable share of the supply of such assets or services;

(5) Prevention of severe damage to an industry which is important to the national economy;

(6) Safeguarding the continued existence of factories as a source of employment in areas in which substantial unemployment may be created as the result of their closure or a reduction in their production;

(7) Improving the balance of payments of the State by reducing imports or reducing the price of imports or by increasing exports and their feasibility".

Approval is given for a maximum period of three years or for a period determined by the Tribunal or by the parties (Section 11) and may be subject to conditions (Section 9). Approval may be revoked if a substantial change has occurred or in the event of objections by third parties (Section 12). A temporary permit to implement the arrangement may also be granted for a period of no more than one year upon recommendation of the General Director if the arrangement appears prima facie in the public interest (Section 13).

An individual exemption from having to obtain an approval may be requested by the parties to an arrangement and granted by the General Director where: (1) the restraints in the restrictive arrangement do not reduce competition in a considerable share of the market affected by the arrangement, or may reduce competition in a considerable share of the market, but do not result in a substantial harm to competition in such market; (2) the objective of the arrangement is not the reduction or elimination of competition, and the arrangement does not include any restraints which are not necessary in order to fulfill its objectives. The exemption may be subject to conditions, amended or revoked and its terms are published in the Official Gazette. Before the 2019 amendment, the General Director had 90 days to hand down its decision. This deadline has been reduced to 30 days.

Finally, pursuant to Section 15A of the Act, the ICA General Director may establish guidelines regarding types of restrictive arrangements for which the parties will be exempt from applying for the Tribunal's approval. However, for the Block Exemption Rules to apply, all of the following conditions must be met: (1) The restraints in the restrictive arrangement must not reduce competition in a considerable share of the market affected by the arrangement, or if such is the case, they must not result in a substantial harm to competition in such market ; (2) The objective of the arrangements must not be the reduction or elimination of competition, and the arrangements must not include any restraints which are not necessary in order to fulfill their objectives.

The General Director's intention to submit Block Exemption Rules to the Committee for ratification must be published in two daily newspapers, and if any objections are received from the public, the General Director, when submitting the Block Exemption Rules to the Committee for ratification, must give a detailed response to such objections. The Block Exemption Rules may remain in force for a period of five years, unless a shorter period is provided for.

The following legislation has been adopted in that context:

- Block Exemption for Non-Horizontal Arrangements, 2013, revised in 2018; 

- Affiliated Companies Block Exemption, 2011;

- Block Exemption for Arrangements Between Air Carriers, 2014, revised in 2018;

- General Provisions and Definitions, 2006;

- Block Exemption for Joint Ventures, 2006, revised in 2018;

- Block Exemption for Arrangements of Minor Importance, 2006;

- Block Exemption for Agreements for the Execution of Research and Development, 2006;

- Block Exemption for Restraints Ancillary to Mergers, 2009, revised in 2018;

- Block Exemption for Syndication Loans, 2018.

Global Competition Law

1014. Exemptions

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Les notions juridiques connexes

1014. Exemptions

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Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise