Criminal Case (Center) 4577-07-24 Competition Authority v. Yaron Peretz - part 7

The equality group includes all those involved against whom prima facie evidence was found to file the indictment.  However, the case law recognized the possibility of partial enforcement for reasons of efficiency in multi-suspect cases, while determining that the limited resources of the enforcement authorities are a legitimate reason for prosecuting only some of those involved (the Selgegi case, supra, at paragraph 14).  It is clear that the prosecution of 50 people involved (and a significant number of companies) would have burdened the judicial system, lengthened the duration of the trial, and reduced the public interest in its existence.  In fact, even conducting a criminal proceeding involving 13 defendants and their related companies, as well as another proceeding involving two additional defendants, after two of them signed a state witness agreement, is very burdensome on the system, as can be seen from the preliminary proceedings conducted so far in the case at hand.

At first, the prosecution focused the investigation, as stated, on a number of criteria: the restrictive arrangement was perfected and implemented; The offense of fraud has been perfected and has borne fruit as a result; Matching a tender in an expected scope of at least ILS 4,000,000; and coordinated a tender by a public body.  Later on, it further focused its enforcement, even at the prosecution stage, on the basis of two parameters: the number of offenses committed by each suspect, and the amount of funds received as a result.  On the basis of these parameters, it determined the criminal score of each and every defendant.

These parameters, which on the face of it reflect the severity of the acts, are clear and measurable, even if it was possible to choose other parameters, as the defendants claim.  Moreover, different defendants proposed different tests that might have helped them, and this is indicative of the interest in proposing one test over the other.  On the other hand, there is no basis according to which the choice of the lawsuit is tainted by extraneous considerations, even though this is not a necessary condition for determining selective enforcement.  In fact, most of the arguments are not against the parameters that were chosen, but rather they focus on additional parameters that could have been added or preferred.  However, the choice of these parameters was within the framework of the broad discretion given to the claim.

24. It should be emphasized here that the selection of parameters that require factual decisions is not appropriate for the stage of focusing enforcement and deciding on the filing of an indictment. Indeed, the failure to file an indictment against the main person involved in one indictment or another, while an indictment was filed against a secondary indictment is uncomfortable.  However, the decision to give weight to the entirety of the involvement of each and every defendant, and not to examine each charge per se, is a reasonable decision.  The determination as to the degree of involvement of one defendant or another may be controversial, it requires a factual determination, and it is not one-of-a-kind, but rather ranges on a range of degree of involvement.  Thus, for example, the fact that the defendant is a partial controlling shareholder in the company does not mean that the degree of his involvement in the commission of offenses was secondary and everything depends on the findings that will be determined.  For this reason, the court is also unable to give weight to this parameter, at this stage of preliminary arguments, but the defendants will be entitled to raise it again, after hearing the evidence.  The same applies to the weight to be given to the number of arrangements.  Here, too, the question of whether a number of arrangements should be considered a single arrangement or a number of arrangements, is a question that must be decided after hearing evidence, if it is heard.

Nor am I of the opinion that the prosecution should have ignored the existence of fraudulent or money laundering offenses in determining the criminal score.  These are two offenses, with different protected values, and within the discretion of the prosecution, weight can be given to the question of whether such offenses exist or not, and how many offenses were committed, in terms of the severity of the acts.

25. In fact, there is substance to the prosecution's argument that the totality of the acts should be examined, from an overall perspective of the severity of the involvement in the affair, in deciding whether to file an indictment against one person or another, and not to focus on a specific charge or a specific offense, since the commission of many more serious offenses, from an overall perspective, is a relevant consideration (Criminal Appeal 6833/14 Nafaa v. State of Israel, in paragraph 7 [Nevo] (31 August 2015)).  All this, even if one or the other defendant has a small role in one of the charges, and is more central in other charges.
26. As for the examination of the relevant scope of funds - the potential profit as a result of the realization of an invalid tender is a relevant criterion in examining the severity of the acts, and it was possible to set a boundary line above the sum of ILS 4,000,000 - which is a significant amount, even if there are gaps between the various defendants, in this matter as well. However, as some of the defendants claimed, it would have been preferable to examine, at the time of filing the indictment, whether the funds were actually received, and if they were not received, why the contract was not realized according to the tender, and not to suffice with an examination conducted at the investigation stage in relation to the potential scope of the tender, some of which was not realized.  However, it is not clear at this stage whether the contract was not extended due to the suspicions or perhaps for some other reason, and in any case it is not clear whether the potential profit was prevented due to the commission of the offenses.  Therefore, here, too, this is a parameter whose significance cannot be examined at this preliminary stage of the legal proceeding, if at all.  It should also be noted that the actual receipt of funds is given weight in determining the criminal score, in the inclusion of money laundering offenses and their scope in the grade given, since this offense was attributed only to defendants who did receive money.
27. In light of all of the above, I did not find that the prosecution's discretion should be interfered with in relation to the selection of the parameters chosen to determine the criminal grade - reasonable parameters were chosen that reflect the severity of the acts, and even if it was possible to choose other parameters that could reflect the severity of the offenses, this does not justify intervention.
28. As for the transfer of the border line after 17 defendants, the prosecution was entitled to choose a certain number of people involved against whom an indictment would be filed, in accordance with its resources. In any event, the exclusion of some of the defendants who were in the hearing from the indictment allowed the inclusion of other defendants.  However, even though it was possible to select a smaller or larger number of defendants, and move the border elsewhere, this does not establish a claim for selective enforcement, since this is part of the prosecution's broad discretion in reducing prosecution due to systemic considerations of efficiency.  In this context, the discrepancy presented by the prosecution between the criminal score of the person involved who was rated 17 and the score of the person involved who was rated 18 is sufficient to provide a reasonable, even if not optimal explanation.
29. As for the method of calculating and normalizing the criminal score, it should be clarified that the prosecution calculated the criminal score in relation to each suspect ranging from 0 to 4 as a combination of four scores: a score ranging from 0 to 1 in relation to each type of offense he committed - that is, a score for restrictive arrangement offenses, a score for fraudulent offenses, and a score for money laundering offenses - as well as a score in relation to the total amount of money.
30. However, the prosecution did not clarify why it chose to determine the grade given to each type of offense in the way it chose. She did not clarify why she chose to weigh the number of offenses committed by each suspect in relation to each type of offense out of the total amount of offenses of that type and not from the total amount of offenses.  The prosecution's choice to carry out the weighting in the manner it chose led to giving excessive weight to the defendants who committed a greater number of offenses of money laundering (X out of 7 offenses), then to the defendants who committed a greater number of offenses of fraud (X out of 9 offenses), and only finally to the defendants who committed a greater number of offenses of a restrictive arrangement (X out of 17 offenses).  All this, but due to the smaller relative number of money laundering offenses, then the larger relative number of fraudulent offenses, and finally the largest relative number of restrictive arrangement offenses.  She also did not clarify why she chose to give equal weight to each offense and the amount of money received (1:1:1:1).
31. This method of weighting, which has not been sufficiently clarified in the prosecution's arguments, will raise questions as to whether it has the potential to influence the determination of the ranking of the defendants, and whether it is possible that certain defendants fell within the scope of the indictment only because of this weighting method. In circumstances in which the weight given to each parameter is likely to have a dramatic impact on the criminal score - and accordingly, on the question of filing an indictment or closing the case in the case of a particular person involved - a detailed explanation is required, which will justify the weights chosen, as well as the presentation of the criminal score that would have been obtained by a different weighting method.
32. As to the claim of selective enforcement in relation to the defendants in other similar cases, I did not find in the defendants' arguments any real basis regarding the existence of an affair similar in scope to this case, in which it was decided to file an indictment against about 50 defendants, and in fact, in similar cases, the Antitrust Authority has already adopted a similar policy of focusing enforcement. Therefore, this argument is rejected in the absence of infrastructure.
33. As stated, not every defect in the decision regarding prosecution will lead to the cancellation of the indictment, and in the absence of improper conduct by the authority, the remedy of canceling an indictment due to selective enforcement will be granted in very exceptional cases, when the defect cannot be remedied by more proportionate means (the Selchagi case, supra, at paragraph 15; The Vardi case, supra, in paragraph 99 of the opinion of the Honorable Justice Hanan Meltzer; The Stürmer case, supra, at paragraph 24; The Harush case, supra, in paragraph 35 of the opinion of the Honorable Justice Uri Shoham; The Peretz case, supra, in paragraphs 33-35 of the opinion of the Honorable Justice Uzi Fogelman and in paragraph 3 of the opinion of the Honorable President Asher Grunis; Borowitz, supra, at pp. 806-807).
34. 00In the case at hand, the vast majority of the claims regarding defects in the decision regarding prosecution, as stated, were rejected, since no defect was found in the decisions that were made. This is not the case with regard to determining the weight that must be attributed to each of the parameters.  This matter has not been clarified, and there is concern that it could lead to biases.  Therefore, the prosecution is instructed to continue to explain its decision in relation to the weights - both in the context of the score given to each type of offense versus an offense of another type, and in the context of determining the balance between each type of score (1:1:1:1) - to the extent that it adheres to this method.  In addition, the prosecution must recalculate the criminal score, calculating the grade given to each offense as the number of offenses out of the total offense instead of the number of offenses from the same type of offense only, and re-rank all those involved according to this method, in order to examine whether there is a change in their ranking.

0Protection from justice - Lack of approval by the Attorney General to file an indictment

35. The defendants initially claimed that the indictment was filed after the deadlines set out in the Authority's procedures, and in the absence of the Attorney General's approval for its filing, in contravention of the provision of Section 57A of the Criminal Procedure Law [New Version], 5742-1982. The prosecution responded to these claims, but also announced that it intends to seek the approval of the legal advisor retroactively.
36. The Attorney General's approval was given on July 8, 2025, and as a result, most of the defendants did not address their arguments in this context, with the exception of defendants 9-10 and 16-18.
37. Counsel for defendants 9 and 10 argued that there is no reason to consider, in the framework of the considerations for granting approval for the filing of the indictment, the fact that the indictment had already been filed, and therefore the indictment should be dismissed, in order for the Attorney General to consider filing it again, in the absence of a pending indictment.
38. Counsel for defendants 16-18 added that there was no reason to grant retroactive approval for the filing of an indictment without reasons, and that there was no possibility of judicial review of the decision. According to them, in light of the defendants' understanding that no indictment will be filed against them, the change in this position, and the artificial combination of indictment 11, the approval of the Attorney General, which was given retroactively about a year and a half after the filing of the indictment, is not sufficient.
39. The prosecution, on the other hand, argued that there was no reason to order the cancellation of the indictment only because the approval of the legal advisor was given retroactively, in circumstances in which the approval was given at an early stage of the proceeding, in the absence of a miscarriage of justice, and when the approval was not requested in advance but due to an error. She further argued that there was no reason to provide the reasons for the decision, because it was an internal record that should not be disclosed to the defense.
40. Section 57A of the Criminal Procedure Law is intended to prevent situations in which the duration of the investigation and handling of the criminal proceeding is longer and longer. For this reason, deadlines have been set for the completion of the investigation and the filing of an indictment (Attorney General's Directive 4.1202 "Prosecution Processing Period Until Indictment is Filed" (April 2023) (hereinafter - "Prosecution Handling Directive"); Competition Authority Procedure "Duration of the Investigation against a Suspect at the Competition Authority" (January 27, 2021)).

Failure to give advance approval by the Attorney General to file an indictment while exceeding the set deadlines violates the purpose of the legislation (Criminal Appeal 2189/23 Aharoni v.  State of Israel, in section 34 [Nevo] (February 20, 2024)).  However, the case law recognized the possibility of granting retroactive approval by the Attorney General when there is no concern that the defendant will be subjected to a miscarriage of justice, based on the principle of relative nullity, all if the circumstances of the case justify it.  In this context, it was determined that retroactive approval at the end of the criminal proceeding raises concerns that the Attorney General will not be able to ignore the fact that all that remains is the issuance of the verdict.  However, "the aforesaid concern does not exist where the approval was given before the hearing of the evidence in the case began, or even if it is only a slight delay" (Criminal Appeal 10189/02 Anonymous v.  State of Israel, IsrSC 60(2) 559, 568-571 (2005)).  Subsequently, it was also ruled that the Attorney General's approval retroactively, but prior to the administration of the evidence, does not give rise to a concern of a miscarriage of justice that would lead to the indictment being dismissed (Criminal Appeal 1965/14 Anonymous v.  State of Israel, at para.  69 [Nevo] (August 17, 2016)).

41. Here is the place to note, a perusal of section 4(e) of the Directive on the Duration of the Prosecution of the Prosecution shows that it is concerned with the approval of the Legal Advisor - in advance or retroactively - for the filing of an indictment in deviation from both the time periods prescribed in relation to the investigation and the periods of time prescribed in relation to the handling of the prosecution. Therefore, the approval given should be seen as relating to the two stages of managing the case.
42. The Attorney General's approval was given shortly after the indictment was filed, at the preliminary stage, and even before the case was set for an evidentiary hearing. Hence, this is a defect that can be cured, in accordance with the theory of relative nullity.  Therefore, there is no reason to cancel the indictment on this ground.

Defense from Justice - Delay in Filing an Indictment

43. Counsel for defendants 1-4 argued that the defendants were protected from justice, due to the prolonged conduct of the investigation and the delay in filing the indictment.
44. The prosecution replied that in view of the scope of the case and the complex investigation, as well as due to the need for supplements after the signing of the state's witness agreements, the investigation continued for a long time, but that the duration of the case met the requirements of the law.
45. Indeed, case law recognized that a delay in filing an indictment may constitute grounds for its cancellation for reasons of protection from justice, when an investigation was conducted slowly and led to a real impairment of a defendant's ability to defend himself, or when the passage of time contradicts the duty of justice and fairness required by conducting a proper criminal proceeding (Vardi, supra, at paragraphs 102-108 of the opinion of the Honorable Justice Hanan Meltzer; Appeal of the Israel Bar Association 2531/01 Hermon v. District Committee of the Tel Aviv-Jaffa Bar Association, IsrSC 58(4) 55 (2004 ); Yisgav Nakdimon Defense from Justice 347-381 (2nd ed., 2009)).
46. In the case at hand, the open investigation began in 2018, and it was claimed that it continued even after the case was transferred to the prosecution, and the indictment was filed in 2024. This is a long and protracted period of time.  The process of deciding on prosecution also took a long time.  However, once the Attorney General's approval is granted, these are periods of time that meet the requirements of the law.  In these circumstances, it is not possible at this stage of the proceeding to determine whether the delay did indeed cause the defendants a miscarriage of justice or impaired their ability to defend themselves.  The weight that should be given to the delay that fell is not in itself a sufficient reason for the purpose of quashing the indictment in its entirety at this preliminary stage (the Vardi case, supra, at paragraph 109 of the opinion of the Honorable Justice Hanan Meltzer).  However, the delay may and will have weight at the sentencing or sentencing stage, to the extent that the defendants are convicted.

Protection from Justice - Attribution of Offenses for Acts Committed with the Knowledge of the Authorities

47. According to another argument by defendants 1-4 for the defense of justice, some of the offenses were committed when the state was aware of them and allowed them to be committed.
48. Counsel for defendants 21-22 also argued that the prosecution seven years after the beginning of the investigation was unreasonable, when the authorities had been aware of the offenses for years and did not act to stop them. In this context, counsel for the defendants agreed at the hearing that it is possible to wait for the presentation of the evidence in order to decide this question, although not necessarily until the verdict is reached, while clarifying that this is not a claim of delay, but rather a question regarding the normative significance that should be attributed to the conduct of the authorities in this context.
49. Defendants 23-24 added that they could not be charged with an offense of fraud against the authority, in relation to the acts committed after the investigation became public.
50. The prosecution, on the other hand, argued that there was no basis for the claim that there was no enforcement on the part of the prosecution, when the offenses were denied by the defendants. On the merits of the matter, she added that the investigator's authority has discretion with respect to the date of the transition to an open investigation, and the arguments presented do not contradict the presumption of administrative propriety in this context.  Furthermore, wiretaps carried out during the undercover investigation were approved by the court.

As to the claims of defendants 23-24, the prosecution replied that they were charged with offenses of fraudulent receipt and money laundering in relation to the funds they won by virtue of a preliminary decision of the tenders committee, which was made on the basis of misrepresentation, while funds received by virtue of a contract extension after the opening of the open investigation were not included in these offenses.

51. The investigative authorities have discretion regarding the decision to make the investigation public, based on many variables. The investigating authority may continue an undercover investigation in order to establish the suspicion that arose and to uncover additional offenses committed by any of the suspects.  In the case at hand, the courts even once again approved the wiretapping as part of the undercover investigation, meaning that the undercover investigation was supposed to expose additional offenses or establish the offenses of which the suspects were suspected at the time.
52. Therefore, and in order to determine whether the prosecution's conduct does indeed establish a claim of protection from justice, as to its knowledge of the commission of the offenses, factual determinations are required as to the status of the investigation at that time and as to the investigative materials that accumulated afterwards. Decisions of this type can be made only after hearing evidence and within the framework of the verdict.
53. As to the claims of defendants 23-24 - in circumstances of winning the tender due to misrepresentation, an offense involving fraud can be attributed to the authorities in relation to funds received pursuant to a decision made prior to the disclosure of the suspicions (Criminal Appeal 6339/18 Balwa v. State of Israel, at paragraphs 66-70 to the opinion of the Honorable Judge Uzi Fogelman [Nevo] (January 15, 2020)).  Since the prosecution clarified that it had attributed fraud and money laundering offenses, but with respect to the false representations that led to the winning of the tender before the suspicions were exposed and the investigation became public, and the funds received as a result of this winning, there is no longer a need to discuss these claims.
54. Therefore, at this stage, there is no room to adopt the arguments that the knowledge of the investigating authorities regarding the offenses for a long time before the investigation became public, establishes the defendants a claim of protection from justice.

Defect in the indictment - attribution of an offense of unlawful breach of the duty of supervision

55. The twenty-seventh indictment attributes to all the defendants, except the defendant companies, the offense of breach of the duty of supervision, under sections 48(a), 48(b) and 48(c) of the Economic Competition Law, retrial - 1988, for lack of supervision and taking actions to prevent the commission of restrictive arrangement offenses by the defendant companies and their employees, each according to his part.
56. Counsel for defendants 5-8, 11-12 and 19-20 argued that the defendants could not be charged with the offense of breach of the duty of supervision under section 48 of the Economic Competition Law, since the offenses were committed prior to Amendment No. 21 to the Law, by virtue of which it is possible to prosecute for the offense of breach of the duty of supervision alongside offenses of a restrictive arrangement. According to them, despite the transitional provision that allows the amended section to be applied to offenses committed prior to the amendment, this is a new and independent offense, and hence according to section 3(a) of the Penal Law, the defendants cannot be prosecuted for both offenses, cumulatively.  Counsel for defendants 5 and 7 added that they could not be charged with breach of the duty of supervision, since they committed the offenses themselves, and there were no employees who could be supervised, in this context.
57. Counsel for defendants 19-20 further argued that the possibility of attributing the offense of breach of the duty of supervision alongside offenses of a restrictive arrangement constitutes an amendment to the law that is stringent with the defendants, and hence its application also contradicts section 5(a) of the Penal Law.
58. The prosecution, on the other hand, argued that the offense of a restrictive arrangement and the offense of breach of the duty of supervision can be attributed in the aggregate, since these offenses are based on different facts and are intended to protect different values. It further argued that section 48 of the Economic Competition Law, in its amended version, does not create a new offense, since in its previous version there was also an offense of breach of the duty of supervision intended to protect those values.  The prosecution also argued that the claim should be clarified in an evidentiary proceeding, and not at the stage of preliminary arguments.  With regard to the argument of defendants 5 and 7, she also argued that the question of whether the defendants should indeed have supervised employees requires a factual clarification.

The prosecution also clarified that it does not intend to claim a double punishment, because the offenses were committed before the amendment to the law, and because it is now a separate offense of breach of the duty of supervision.

59. The defendants' arguments relate to the possibility of convicting them of the offense of breach of the duty of supervision alongside the offense of a restrictive arrangement. These are claims that do not concern a defect in the indictment, but rather with the legal justification for the conviction.  Therefore, the place to decide them is not at the preliminary stage of the proceeding, even if a decision on the claim is mostly a legal decision.  Either way, there are also evidentiary aspects to the claim, at least according to some of the defendants.  Moreover, the prosecution has already stated that it will not seek a harsher sentence if the defendants are convicted of both offenses.

Therefore, and without expressing a position as to the nature of the claims, this is not the place to decide the defendants' claims at this preliminary stage, and they are reserved for them to the appropriate stage, to the extent that they see fit to raise them.