Discussion and Decision
- I will preface the beginning and note that after reviewing the parties' arguments in writing and hearing their arguments before us orally, I have reached the conclusion that the company's appeal should be partially accepted in relation to the parallel import chapter, and accordingly the law of the respondent's appeal of the Commissioner should be rejected, and so I will suggest to my colleagues that it be done.
- The Competition Law is based on a main purpose, which is to protect the public from practices that may harm social welfare in the economy (Civil Appeal 8387/20 Ashdod Port Company in Tax Appeal v. Commissioner of Competition, paragraph 49 [Nevo] (January 8, 2024) (hereinafter: the Ashdod Port case)). One of the most significant tools for achieving this goal is the promotion of competition in the economy, with the aim of benefiting the consumer and the public, based on the perception that free competition in the market is of great value and has the power to guarantee consumers products of the best quality, at the most reasonable price, in a manner that matches the market demand, and even to incentivize streamlining development and innovation (Civil Appeal 4120/20 Ofir Naor, Adv. v. Tnuva, Cooperative Center for Marketing Agricultural Produce in Israel, Paragraph 36 [Nevo] (March 20, 2023) (hereinafter: the Tnuva case); Civil Appeal Authority 1248/19 Central Company for the Manufacture of Soft Drinks in Tax Appeal v. Gafniel, para. 25 [Nevo] (July 26, 2022) (hereinafter: the Gafniel case); Criminal Appeal 1656/16 Davidovich M. State of Israel, para. 69 [Nevo] (March 20, 2017); High Court of Justice 588/84 S.R. Asbestos Trade in TaxAppeal v. Chairman of the Antitrust Supervisory Board, IsrSC 40(1) 29, 37-38 (1986)). In this regard, it has long been held that "antitrust law is the 'shield' of consumer rights and free competition" (Civil Appeal 2247/95 The Antitrust Commissioner v. Tnuva Cooperative Center for Marketing Agricultural Produce in Israel Ltd., IsrSC 52(5) 213, 230 (1998); and see also: Additional Civil Hearing 4465/98 Tivall (1993) in Tax Appeal v. Chef of the Sea (1994) Ltd.IsrSC 56(1) 56, 80 (2001)). The promotion and maintenance of competition is therefore a central pillar of the Competition Law. For the sake of completeness, it should be noted that the Competition Law also seeks to deal with a series of other business practices that harm the collective welfare other than by harming competition (Ashdod Port Case, para. 49; Barak Orbach, "The Objectives of Antitrust Law: In Practice," Legal and Economic Analysis of Antitrust Law, Vol. 1, 63 (Michal (Shitzer) Gal and Menachem Perlman, eds., 2008)).
- One of the phenomena that the law seeks to deal with, which has been recognized as having the potential to lead to excessive concentration in the market and harm competition, is the existence of monopoly holders. The very existence of a monopoly is not prohibited by law, and in this regard it has also been argued in the past that "the aspiration to increase market share or to achieve significant market power is even perceived as driving the wheels of competition and incentivizing competitors to differentiate themselves through higher quality products and services" (Gafniel, para. 26; See also: Tnuva case, paragraphs 37-38). At the same time, in view of the understanding that a monopoly holder holding a significant market share raises a concern of harm to competition and the public, the law imposed various restrictions and prohibitions on its activity (Chapter D of the Law). Section 26 of Chapter D of the Law defines who is a "monopoly holder", and regulates the authority of the Commissioner to declare its existence. Alongside the definition of a "monopoly owner", the law enumerates, as aforesaid, a series of restrictions and prohibitions, including a prohibition on a monopoly owner from unreasonably refusing to provide or purchase the property or service in the monopoly (section 29 of the law); and a prohibition on a monopoly holder from abusing his position in the market in a manner that is liable to reduce competition in business or harm the public (section 29a(a) of the law). In addition, the law enshrines the authority of the Commissioner to give instructions to the monopoly owner regarding the steps he must take to prevent harm to competition in business or the public, if he deems that as a result of the existence or conduct of the monopoly owner, such harm is caused (section 30 of the Law).
- Another issue that the law seeks to regulate is the merger of companies (chapter 3 of the law). The basic assumption is that mergers are an inherent practice for the business world. They can also increase aggregate welfare and efficiency, and they are not in themselves detrimental to competition. However, their existence gives rise to the fear of increasing the market power of a merged company in a way that will harm competition. Accordingly, the Director-General was given powers to regulate and restrict the merger of companies in accordance with the concrete circumstances (Criminal Appeal 5823/14 Shufersal in Tax Appeal v. State of Israel, para. 8 [Nevo] (August 10, 2015); see also: David Gilo, "Mergers under the Resuscitation Law - A Critical Analysis," Law and Business 8, 333, 334 (2008)). Thus, for example, Section 21 of the Law allows the Commissioner to condition a merger on conditions if in his opinion there is a reasonable concern that as a result of the merger, competition in that industry will be significantly harmed or the public will be harmed.
- In addition, for the purpose of law enforcement, the Ombudsman was given various tools. inter alia, the mechanism that is the subject of the appeals before us regarding the imposition of a financial sanction under Chapter G1 of the Competition Law. Section 50D of the Law states that the Commissioner may impose a financial sanction on a person who violates a series of provisions listed in the Law, including, for example, the prohibitions enshrined in Sections 29 and 29A of the Law, provisions regarding mergers, provisions given to a monopoly holder, and provisions given within the framework of an agreed order (which will be expanded on later). In addition to the aforesaid, section 50F of the Law instructs that if the Commissioner has reasonable grounds to assume that a provision of the provisions specified in Section 50D of the Law has been violated and intends to impose a financial sanction, he will do so after giving notice of his intention to do so to the violator. After the notice has been delivered, after the violator has been given the opportunity to exercise his right to plead and the Commissioner has considered his claims, and after the Commissioner has consulted with the Exemptions and Mergers Committee, he will decide whether to impose such a financial sanction and determine its amount (Sections 50G and 50H of the Competition Law). Section 50E of the Law specifies various considerations that the Commissioner must consider when determining the amount of the financial sanction. Among other things: the duration of the violation; the extent to which the violation may cause harm to competition or the public; the part of the violator in the violation and the degree of its influence on its execution; the existence or absence of previous violations and the date they were committed; actions taken by the violator to prevent the recurrence or cessation of the violation or to correct its consequences; And with regard to a violator who is a corporation, there is a significant concern that as a result of the imposition of the sanction, it will not be able to repay its debts. The determination of the amount of the sanction is also done in accordance with the Director-General's statement on the matter, where the decision that is the subject of the appeals was based on the Antitrust Commissioner's Statement 1/16 and the amendment to the disclosure (Antitrust Commissioner's Statement 1/16, "The Antitrust Commissioner's Considerations in Determining the Amount of a Financial Sanction" (October 26, 2016, the Competition Authority 501072; Amendment to the Competition Commissioner's Statement 1/16, "The Competition Commissioner's Considerations in Determining the Amount of a Financial Sanction" (November 24, 2019, the Competition Authority 501683).
- Another enforcement tool that is worth mentioning, and which is relevant to our case, is the agreed order regulated in section 50B of the Law. The use of an agreed order will be made in lieu of resorting to various procedures, including the financial sanction mechanism. The court or tribunal may give the agreement between the Commissioner and another the validity of an order at the request of the Director-General, where an agreed order may be without an admission of liability and may include an obligation to pay the State Treasury as well as an obligation on the part of that person or company to do something or refrain from doing it.
- When we have briefly discussed the purposes and principles underlying the Competition Law and the main arrangements therein, and before we dive into the examination of the concrete claims, let us mention the glasses that we are wearing in the framework of our work. This Court sits as a "regular" appellate court against the decisions of the Competition Tribunal, and in this it is subject to the rule of non-interference with findings of fact and reliability, which has special weight where we are dealing with issues that are at the heart of the Tribunal's area of expertise (Ashdod Port Case, para. 48; Civil Appeal 6343/11 Hollandia Sleep Engineering Center in Tax Appeal v. Antitrust Commissioner, para. 28 [Nevo] (December 24, 2013)). It is therefore clear that the Court's professionalism stems from the relative restraint that must be exercised when intervening in its decisions (Civil Appeal 3398/06 Antitrust Authority v. Dor-Alon Energy in Israel (1988) Ltd., the opinion of Justice Arbel [Nevo] (December 6, 2006)).
This brings us to a discussion of the three issues that remain before us - the threshold of proof and the strength of the evidence; the clause of the period of the agreement; and a policy against parallel imports. And now the first first, and the last last.