Civil Appeal 8709/23 The Central Beverage Distribution Company Ltd. v. The Commissioner Financial Case – Supreme Court of Competition

Civil Appeal 8709/23
and Respondent’s Appeal under Regulation 137(b)

Judge David Mintz:

Appeal and Appeal Respondent to the Judgment of the Jerusalem Competition Court (Judge T.  Bezeq Rappaport, Lieutenant Colonel) of June 27, 2023 inCivil Appeal 16677-03-20, [Nevo] in which the main point of the appellant's appeal against the respondent's decision was rejected.

Background to the Appeals and the Director-General's Determinations

1. The focus of the appeals is a financial sanction imposed on the Appellant (and the Respondent in the Respondent's Appeal), the Central Company for the Distribution of Drinks in a Tax Appeal (also known as the "Central Company for the Manufacture of Soft Drinks Ltd."; hereinafter: the Company), by the Respondent (and the Appellant in the Respondent's Appeal), the Commissioner of Competition (hereinafter: the Director-General), in the sum of ILS 39,151,359. The Director-General imposed the sanction on the company after it found that on a number of occasions it had violated the Economic Competition Law, 5748-1988 (hereinafter: the Competition Law or the Law), as well as various provisions thereunder.
2. The company is a major player in the soft drinks market in Israel and owns significant brands in the field. It markets its products, including the "Coca-Cola" brand, among other products.  The Coca-Cola beverages marketed by the company are a necessary product for retailers in light of consumer preferences, known as "must have".  Therefore, as early as 1998, the company was declared to have a monopoly in the cola beverage industry (declaration of the existence of a monopoly: the Central Company for the Manufacture of Soft Drinks in a Tax Appeal (April 8, 1998) 3001292 Competition Authority).  Accordingly, various provisions and prohibitions were established in the matter of the company (Central Company for the Manufacture of Soft Drinks Ltd.: Instructions for a Monopoly Holder (May 10, 1998) Competition Authority 3006300 (hereinafter: Instructions for a Monopoly Holder)).  A few years later, the company merged with Neviot Teva HaGalil Ltd., and in this framework additional prohibitions were imposed on it (Decision Regarding the Merger Notice of 03.08.2004: The Central Company for the Production of Soft Drinks in Tax Appeal Neviot Teva HaGalil inTax Appeal (3.8.2004) Competition Authority 5722; Decision Regarding the Merger Notice of September 12, 2004: The Central Company for the Production of Soft Drinks in Tax Appeal Neviot Teva HaGalil in Tax Appeal (September 12, 2004) Competition Authority 5722 (hereinafter: the terms of approval of the merger)).  In addition, after suspicions arose of violations of the provisions of the law by the company's employees, in 2005 the Competition Court approved, in lieu of enforcement proceedings, an agreed order that added additional restrictions on the company's activities (CA (Antitrust) 612/05 The Antitrust Commissioner v.  The Central Company for the Manufacture of Soft Drinks in a Tax Appeal [Nevo] (November 13, 2005); The text of the order agreed upon between the Antitrust Commissioner and the Central Company for the Manufacture of Soft Drinks in a Tax Appeal (November 13, 2005) 5000149 Competition Authority (hereinafter: the Agreed Order)).

The Ottoman Settlement [Old Version] 1916 The company is therefore subject to a series of restrictions, including the agreed order; Chapter D of the Law the competition that deals with monopoly; Instructions for a monopoly owner; and the terms of approval of the merger.  Against the background of these restrictions, between the years 2012-2016 the company was investigated by the Competition Authority (hereinafter also: The Authority) in a criminal investigation that was closed at the end of the day and the findings were transferred to the administrative level for further treatment.  Subsequently, between the years 2017-2019, the company was sent two hearing letters on behalf of the Director-General, indicating a notice of the intention to impose administrative financial sanctions as a matter of course In the section 50and to the law.  The first was sent on March 22, 2017, to which the company replied on November 27, 2017.  and the second was sent on April 16, 2019.  After sending the second letter and receiving a response from the company, the company held an oral hearing before the director-general.  At the end of the dispute and the dialogue that took place between the parties, on December 24, 2019, the ISA published its determination that is the focus of the appeals before us: "A determination regarding abuse of status in contravention of the provisions Section 29A 30The Economic Competition Law, 5748-1988 and demanding payment according to the provisions Section 50VIII of the Central Beverage Distribution Company Ltd.  Law" (hereinafter also: Determination of the Supervisor).  As part of this determination, a financial sanction was imposed on the company in the total amount of ILS 39,151,359.  This is due to the determination that in a series of events, the company abused its position as a monopoly holder in violation of the provisions Section 29A to the law; Unreasonably refused to provide a product in a monopoly in violation of the instructions Section 29 to the law; violated the instructions for a monopoly owner; the agreed order; and the terms of approval of the merger.