The standard of proof and the strength of the evidence
- It has already been said that I did not see room to intervene in the Tribunal's determination with regard to the standard of proof and the strength of the evidence, and consequently also in the essence of the Tribunal's rulings deriving from this on the merits of the matter. The focus of our matter, as stated, is the mechanism of financial sanction enshrined in chapter G1 of the Competition Law, which is an administrative mechanism (Ashdod Port case, paragraph 168). Accordingly, the Commissioner is subject to the rules of administrative law in its operation. In doing so, it must rely on an appropriate evidentiary basis when it comes to collecting the evidence, in the process of drawing its conclusions and in its final determination (Ashdod Port case, para. 70; Appeal Petition/Administrative Claim 430/20 Ministry of Environmental Protection v. Kavim Public Transportation Ltd., paragraphs 11-13 [Nevo] (March 16, 2021)). In addition, once it has been determined that a monetary sanction is an administrative mechanism, its imposition is subject to an administrative evidence threshold (see the rulings of the Competition Courts: Civil Appeal (Antitrust) 40796-01-16 Ashdod Port Company Ltd. Commissioner of Competition, paragraph 317 [Nevo] (June 23, 2020); Civil Appeal (Antitrust) 53090-03-17 Israel Electric Company in Tax Appeal v. Commissioner of Competition, para. 385 [Nevo] (January 19, 2021)). The administrative test that applies accordingly is the test of administrative evidence, according to which the authority must base its decision on a factual basis on which a reasonable authority would have relied, and the more severe the decision is expected to lead to harm to the individual, the more careful the authority must be very careful in basing its decision and adopt a stricter evidentiary standard than usual (High Court of Justice 987/94 Euronet Golden Lines (1992) inTax Appeal v. Minister of Communications, Ms. Shulamit Aloni, IsrSC 48(5) 412, 423-426 (1994); Civil Appeal 3886/12 Ze'ev Sharon Building and Dirt Contracting in Tax Appeal v. VAT Administration, para. 30 (August 26, 2014); Dafna Barak-Erez, Administrative Law, Vol. 1, 439-460 (2010); Yitzhak Zamir, Administrative Authority, Vol. 2, 1136 (2011)). It is therefore clear that the strength of the evidence and the threshold of proof are administrative and not criminal, with the evidentiary standard varying according to each case, while balancing the purposes and interests.
- In our case, the company argued that the court erred in determining that an evidentiary standard of a balance of probabilities is sufficient for the purpose of imposing a financial sanction. It seems that this embodies a double criticism, both with regard to the very possibility of applying such a evidentiary standard in the exercise of the authority of the Commissioner to impose a financial sanction in general, and with regard to the determination that the concrete case does not reveal an exceptional reason that justifies an increased evidentiary burden of more and stronger evidence.
- As for the evidentiary standard that is customary, as stated above, it is an administrative evidentiary standard that the concrete evidentiary requirement it establishes, and in this context, the strength of the required evidence, varies from case to case according to the harm at hand. A perusal of the judgment reveals that the court was also of the opinion that the intensity of the burden varies, as stated, and that its determination in this case was based on the specific circumstances of the case. Moreover, it is not entirely clear whether the court indeed believed that the evidentiary strength in the case before it was at the level of proof of a balance of probabilities or even higher than that - so it is difficult to view this as a determination of principle, and in any event this is not the appropriate case to discuss this question. Together with the aforesaid, I cannot accept the company's position that the proper standard of proof is similar to that practiced in criminal proceedings. This position is inconsistent with the administrative nature of the sanction (see and compare: High Court of Justice 1993/03 The Movement for Quality Government in Israel v. Prime Minister, Mr. Ariel Sharon, IsrSC 57(6) 817, 910 (2003); High Court of Justice 442/71 Lansky v. Minister of the Interior, IsrSC 26(2) 337, 355-356 (1972); For more on the subject, see and compare: Administrative Petition (Tel Aviv District) 37447-10-13 Africa Israel Industries in Tax Appeal v. Israel Securities Authority, paragraphs 68-79 [Nevo] (August 2, 2014)), and with the intention of establishing an effective, rapid and efficient response to deal with violations of the law that are distinct from the criminal proceedings (Explanatory Notes to the Bill The Restrictive Trade Practices Law (Amendment No. 14) (Financial Sanction), 5772-2011, Government Bill 637, at p. 240 (hereinafter: the explanatory notes to the law); see also: Michal (Shitzer) Gal and Amir Israeli, "The Scarcity of Adverse Remedies - An Analysis of the Existing Remedies and Suggestions for Improvement," Iyunei Mishpat 55, No. 43 (2012)). To this, it should be added that the company's arguments regarding the existence of a standard of proof of "reasonable doubt" in European law, and its implications for setting the evidentiary standard for the examination of the Director-General, are not convincing. This is given that it has long been established that the rulings of the courts of the European Community, although it constitutes an important comparative source on the subject, are not binding under Israeli law (see and compare: Ashdod Port case, para. 125). With regard to the concern raised by the company regarding the broad implications of the examination under the Competition Law to other cases in which administrative authorities impose financial sanctions, in view of the unique characteristics of the process of imposing the financial sanction under the Competition Law, including the close judicial review by the Competition Tribunal, as will be expanded below, I did not find any substance in this argument either. The company also claims that the need for a strict standard of proof arises in light of the large sums that can be imposed as part of the sanctions. However, although, as stated, the amounts on the agenda should not be lenient, it seems that this argument finds a solution by the fact that the amount of the sanction is adjusted to the identity of the violator and his sales turnover, so that "the differential sanction imposed on corporations expresses the principle of proportionality" (explanatory notes to the law, at p.
- Indeed, there is no dispute that the mechanism of financial sanctions carries with it significant implications. However, these consequences are addressed and balanced in the administrative process itself as well as in the judicial review process. The administrative clarification process includes the right to a plea, the obligation to consult and the right to appeal to the Competition Court (Sections 50G, 50H and 50H of the Competition Law). In addition, the concern about the mechanism of the financial sanction, with its implications, receives a certain balance in view of the nature of the examination and the exercise of judicial review by the Tribunal. In the Ashdod Port case, we discussed at length the scope of the Tribunal's authority to exercise judicial review in examining the Director-General's decisions regarding the imposition of a financial sanction. In this context, we discuss the unique nature of judicial review exercised by the Competition Court in comparison to "regular" or "classical" judicial review. And this is what it says there:
"The Competition Court is an administrative tribunal established by virtue of Section 32 of the Economic Competition Law (formerly known as the Restrictive Trade Practices Law; Accordingly, in the past, the Competition Court was referred to as the Antitrust Tribunal). The presiding judge of the Competition Tribunal and his deputy are judges of the District Court (section 32(c) of the Law), and the other members of the Tribunal are parties with expertise in the field dealt with by the Competition Law, with at least three members being representatives of consumer organizations and three additional members being representatives of economic organizations (section 32(d) of the Law). In addition to the expertise in which the members of the Competition Court are characterized, he has many tools at his disposal that help him fulfill his role. [...] In contrast to 'regular' judicial review according to the rules of administrative law, including judicial review exercised by this court of the Director-General's decisions sitting as the High Court of Justice (see, for example, High Court of Justice 4501/14 Adv. Persky v. Antitrust Commissioner, para. 17 [Nevo] (July 23, 2015); High Court of Justice 2376/22 Adv. Har Shemesh v. Competition Commissioner of the Competition Authority, paragraph 6 [Nevo] (June 20, 2022). Compare also to the High Court of Justice 6023/22 MBI Pharma inTax Appeal v. The Commissioner of Competition [Nevo] (December 4, 2022)), the provisions of the Competition Law, combined with the tools provided by the Competition Tribunal, tell us that the manner in which the Director-General's decisions are examined by the Competition Court is broader: his role is to exercise independent discretion and to examine in depth the issue that is the subject of the Director-General's decision; It has the authority not only to approve or cancel the decision, but also to issue a different decision in its place [...] The Competition Court is a body with special professional knowledge and has many tools at its disposal for the purpose of conducting a more rigorous administrative judicial review than the usual one, including that it may even deviate from the Director-General's decision, and make a different decision if it finds that it is necessary to do so" (ibid., paragraphs 39-45).
- And to be precise. The judicial review that is customary in the Competition Court is relatively tight than "classic" judicial review, with the nature of the examination being broader and includes the exercise of independent and professional judgment while examining the issue in depth. This scope of judicial review is also customary in examining the Director-General's decisions regarding a financial sanction - the decision that is the subject of our interest. Moreover, in the Ashdod Port case, it was determined that the exercise of judicial review in cases such as this would be even more meticulous and would include a thorough examination of the adequacy of the evidence. In this regard, it was also argued that the nature of the examination described was before the legislature in the discussions that took place in the Knesset on the financial sanction mechanism, and was even considered as a response to the concerns that arose regarding the deviation of the mechanism (ibid., para. 47; minutes of the 728th session of the Economic Affairs Committee, 18th Knesset, 10, 14, 22 (January 24, 2012)). It seems that the aforesaid statements are sufficient to offer a response to the various concerns raised by the company.
- In our case, the examination conducted by the court in the matter of the company was in-depth and meticulous. In doing so, he relied on the various pieces of evidence brought before him, including conversations that a sales manager on behalf of the company had with a customer; the investigation of a channel manager on behalf of the company; customer testimonials; The Company's Response to the First Hearing; the company's arguments before him; various e-mail messages; testimonies heard during the hearings and the like. To this, it should be added, in connection with the aforesaid regarding the adjustment of the sanction to the violator, that in the judgment it was emphasized that the amount of the sanction, which is a considerable amount, is affected by the company's sales turnover, which stands at approximately ILS 3.9 billion. Therefore, it was determined that one hundredth of the company's turnover is not particularly high in relation to the sanction that could have been imposed on it. Further to the above, it was also determined that the amount of the sanction or the severity of the acts does not justify an increased burden. It is therefore clear that in the totality of the circumstances, the scope of the evidentiary examination conducted by the tribunal is sufficient and there is no room for our intervention in its determination that the evidentiary strength brought before it was sufficient.
Agreement Term Clause
- At the outset, I will say that I did not see fit to accept the company's arguments with regard to the clause of the agreement period and I was under the impression that there was no reason to intervene in the analysis conducted by the tribunal in this matter or in the result it reached. In the meantime, it should be recalled that the court ruled that the inclusion of the clause of the agreement period in the company's trade agreements violated a series of provisions and restrictions that were applied to the company: the agreed order, the instructions to a monopoly holder regarding the assumption of an aggregate purpose and the matter of binding (but not in the matter of exclusivity), the terms of the approval of the merger and section 29A of the law. I will therefore refer below to the main arguments of the company that arose before us. For the sake of convenience, the wording of the section will be brought again in order to attract the reader's eye:
"The validity of this agreement is [...]