Was the defendant's demand to publish minimum prices legal?
- This question is important for the purpose of assessing the defendant's good faith and for determining eligibility for compensation.
- The plaintiff claims that the demand constitutes a "restrictive arrangement" in violation of the Economic Competition Law, 5748-1988 (formerly: the "Restrictive Trade Practices Law"). The defendant claims that the demand relates only to advertising and not to sale, and therefore does not bind it.
- The normative framework, section 2(a) of the Competition Law defines a "restrictive arrangement" as an arrangement between business managers whereby one of the parties restricts itself in a manner that is likely to prevent or reduce competition. Section 2(b)(1) establishes a presumption that the arrangement in which the restraint relates to the price that will be demanded, offered or paid, will be considered a restrictive arrangement.
- In the Supreme Court's ruling in Criminal Appeal 5823/14 Shufersal in Tax Appeal v. State of Israel [Nevo] (August 10, 2025), which dealt with the elements of the criminal offense, it was held that the elements of the offense of a restrictive arrangement, according to Section 2(a) of the Economic Competition Law, include four cumulative components: "arrangement", "between persons conducting business", and "shackling" (at least one of the parties limits itself), and "libels" (the potential to prevent or reduce competition). These elements are subject to an expansive interpretation, with the exception of the element of "shackling" to which reduced weight is given, and it was further determined that there is no obligation to conduct a market analysis in any case in order to prove the element of "libels".
The Supreme Court clarified that the elements of the offense should be interpreted as follows:
Arrangement; This element should be given an expansive interpretation, which will also include a low level of coordination, such as winking or any other understanding, while giving limited, if any, importance to the requirement of contractual specificity, in view of the substantial difference between an "arrangement" and a "contract". The definition in section 1 of the law is broad and includes agreements explicitly or implicitly, in writing, orally or in conduct, whether or not they are legally binding.