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Counsel for the parties:

Counsel for the accuser: Attorney Ohad Burstein, Attorney Natan Yarden and Attorney Amira Burkan

Counsel for Defendants 1 and 3: Adv. Ravit Zemach and Adv. Amit Nir

Counsel for Defendants 5 and 7: Attorneys Yael Grossman and Attorney Sally Licht

Counsel for Defendants 8 and 10: Attorney Assaf Maron

Counsel for Defendant 15: Adv. Gal Rosant and Adv. Ran Carmi

Counsel for defendant 16: Attorney Boaz Golan and Attorney Uri Porat

Table of Contents

The Normative Framework. 2

The indictment, the defendants and the proceedings - general 11

General Note Regarding the Evidence and its Evaluation. 13

The Liability of the Accused Companies Due to the Actions of Individuals in Them.. 19

The first charge. 31

The second indictment. 49

The Third Charge. 77

The Fourth Charge. 102

The Fifth Charge. 117

The Sixth Charge. 141

The Seventh Charge. 166

The Eighth Charge. 172

The Ninth Charge. 180

The Tenth Charge. 189

The Eleventh Charge. 212

The Twelfth Charge. 258

The Thirteenth Charge. 267

The Fourteenth Charge. 293

The Fifteenth Charge. 298

The Sixteenth Charge. 316

The Seventeenth Charge. 325

The Eighteenth Charge. 345

The Defense's Arguments Regarding IBM's Conduct - IBM's Special Mechanism.. 362

Allegations of Investigation Failures. 373

Additional Arguments. 381

Conclusion. 388

At the outset: I decided to acquit defendants 15 and 16 of the offenses of a party to a restrictive arrangement and fraudulent receipt of something under aggravated circumstances attributed to them in the indictment (within the framework of the eleventh indictment).  I decided to acquit defendants 3 and 7 of such offenses due to doubt about the aforementioned offenses attributed to them regarding the online pricing (which is the second part of the eleventh charge).  I have decided to convict defendants 1, 3, 5, 7, 8 and 10 of the offenses attributed to them in the other charges in the indictment (and with regard to the eleventh indictment of the offenses attributed in connection with the Oranim police station).  I also decided to convict defendants 1 and 8 of the offense of officer's responsibility.

Overview

1. The amended indictment includes 19 charges. His interest is in procurement transactions in the field of computing.  According to the reference, in the summary, between the years 2009-2012, the defendant companies, which are companies engaged in the distribution of hardware and computer software, and their officers, coordinated prices among themselves and determined who would be the winner of the requests for quotes and other competitive proceedings referred to them by various parties, mainly Israel Aerospace Industries.
2. The main offenses attributed to the defendant companies and the defendant officers, which are repeated in the various charges, are offenses of a party to a restrictive arrangement and fraudulent receipt of something under aggravated circumstances.
3. At the outset, and before discussing the various charges, we will discuss the main points of the general normative framework relating to these offenses.

The Normative Framework

Offense of a party to a restrictive arrangement

4. The prohibition to be a party to a restrictive arrangement is set forth in Section 4 of the Economic Competition Law, 5748-1988 (hereinafter: the Competition Law; at the time of the filing of the indictment, the law was referred to as the Restrictive Trade Practices Law). Section 47(a)(1) of the Competition Law, as worded as of the date of the filing of the indictment that began in our case, states that a person who "was a party to a restrictive arrangement that was not lawfully approved and who was not granted a temporary permit or exemption..."In the Restrictive Trade Practices Law (Amendment No. 21), 5779-2019, the prescribed penalty for the offense of a party to a restrictive arrangement, even without aggravated circumstances, was increased to five years in prison.  In accordance with the transitional provision set forth in section 55a(b) of the Law on an offense by a party to a restrictive arrangement that was committed prior to the date of commencement of the amendment, January 10, 2019, the provisions of section 47(a) as drafted prior to the amendment will apply).

Elements of the offense

5. Section 2(a) of the Law instructs that "a restrictive arrangement is an arrangement made between persons conducting business, whereby at least one of the parties restricts itself in a manner that may prevent or reduce competition in business between it and the other parties to the arrangement, or part thereof, or between it and a person who is not a party to the arrangement."

A restrictive arrangement according to this definition includes four cumulative elements: (1) the existence of an arrangement; (2) the arrangement is made between persons conducting business; (3) a restriction imposed on at least one of the parties to the arrangement; (4) The libels of the harm to competition inherent in the arrangement, i.e., the restriction is made in a manner that is likely to prevent or reduce competition in business (Criminal Appeal 4855/02 State of Israel v.  Borowitz, at paragraph 78 (31 March 2005)).

6. The arrangement is defined in Section 1 of the Competition Law as follows: "Whether explicitly or in a college, whether in writing or orally or in conduct, whether it is legally binding or not." This is a very broad definition that is intended to capture in its network any kind of arrangement that may harm competition, whatever its creation. In the Borowitz case, it was held that: "The term 'arrangement' itself is broader than the terms 'contract' or 'agreement'.  This broad definition is intended to include any type of agreement and any way of reaching an agreement between the parties to an arrangement.  The arrangement does not need to have the legal status of a contract (for example, it is not subject to the usual rules of offer and acceptance or specificity), and some minimum level of mutual understanding, agreement, or cooperation between the parties is sufficient to create it...  Consent to a settlement does not have to be explicit, and it can also be implicit consent or consent to behavior...  tacit consent is also sufficient to create the arrangement" (ibid., at paragraph 79).  In view of the purpose of the law to prevent any coordinated way of imposing a restrictive arrangement, it was determined that a restrictive arrangement can also be made orally, with a wink of the eye, with a nod of the heads, through a third party, and other ways to reach coordination or a common understanding (ibid., and see also criminal appeal 1042/03 Metzerplass Limited Partnership in a Tax Appeal (1974) v.  State of Israel, at paragraph 14 (10 November 2003), where the well-known things were brought with consent from Civil Case (Jerusalem District) 396/87 Kissin v.  Petrogas Israel Gas Company (1969) in a tax appeal (9 May 1990)).  The expansive interpretation is also required in order to "prevent sophisticated circumvention of the provisions of the law 'in an Israeli version'" (Criminal Appeal 2560/08 State of Israel v.  Wall at paragraph 100 (6 July 2009)).
7. The parties to the arrangement - persons conducting business: As ruled, this term also includes corporations, and in all matters relating to business management, a broad purposive approach was adopted, according to which the purpose of this requirement is "to distinguish between business entities and entities that are not, such as consumer entities" ( Borowitz at paragraph 81). The term "business" is broadly defined in Section 1 of the Competition Law, as referring to "engaging in the production, sale, marketing, purchase, import or export of an asset, as well as engaging in the provision or receipt of a service".  These definitions apply to all the companies whose matter is discussed in this judgment.  The same is true of the other defendants who operated in the framework of their business activities in the defendants' companies.
8. As to the element of the restriction, it was held that "a restriction that will be considered to create a restrictive arrangement is a restriction that limits the freedom of action given to those who conduct the business... Whether as a result of the restriction he is prohibited from doing anything (for example, addressing a certain audience of customers) or whether the restriction requires him to act only in a certain way (for example, to sell his products only at some agreed price)" (Borowitz at paragraph 87).  It was further noted that "it is sufficient for one of the parties to the arrangement to limit himself in the aforesaid manner in order for the arrangement to be considered a restrictive arrangement from the point of view of all its partners" (ibid.).  In this context, it was also held that it was sufficient that a party to the arrangement narrowed its freedom of action and limited its ability to compete in order to fulfill this principle (Criminal Appeal 7829/03 State of Israel v.  Ariel Electrical Engineering, Traffic Lights, Control in a Tax Appeal, paragraphs 14-15 (July 14, 2005)).  It was further held that "the basis of the limitation should not be used to limit the application of section 2 of the Law, and that the emphasis in the section is placed on the limitation of competition, i.e., on the test of libel" (Criminal Appeal 1408/18 State of Israel v.  Ben Dror, at paragraph 24 (August 21, 2018); See also Criminal Appeal 5823/14 Shufersal in Tax Appeal v.  State of Israel at paragraph 42 (August 10, 2015)).
9. The Causes of Harm to Competition - As ruled, this element reflects a functional test for examining the consequences of the restrictive arrangement and its potential harm to competition. "The meaning of this term is that in order for an arrangement to be considered a restrictive arrangement there is no need to prove that it actually harmed competition, and it is sufficient that the arrangement has the potential to harm competition", it is sufficient that the arrangement is liable to harm competition (Borowitz at paragraph 88).  The definition of a market is not one of the elements of the offense and is not a necessary condition for assessing the libels of harming competition.  It was ruled that "we are dealing with a matter that depends on the circumstances...  There may be clear cases in which it is as clear as the sun at noon that we have a business restriction according to the evidence...  To paraphrase ...  'When I see the limit, I know it.'"
10. Section 2(b) of the Competition Law establishes absolute presumptions, which, if fulfilled, will be regarded as a restrictive arrangement in which a restriction relating to the matters specified in the section will be regarded as a restrictive arrangement. These matters include restraint with respect to the price that will be demanded, offered or paid (section 2(b)(1)); Restriction with respect to the profit to be generated (section 2(b)(2)); Restriction for the purpose of dividing the market, in whole or in part, according to the place of business or according to the persons or type of persons with whom they will engage (section 2(b)(3)); and a restriction with respect to the quantity, quality or type of assets or services in the business (section 2(b)(4)).  It was held that restraints in the aforementioned matters are such that by their nature are capable of harming competition, and therefore it is not necessary to prove the potential harm to competition.  "An arrangement relating to one of the issues specified in the absolute presumptions...  will be considered a restrictive arrangement, and with respect to such an arrangement there is no need at all to prove that it is liable to harm competition" (Borowitz, at paragraphs 89-91; See also the Ariel case at paragraph 16; the Wall case at paragraphs 88-88; the Ben Dror case at paragraphs 26-27; in the Shufersal case it was held that the absolute holdings apply to horizontal arrangements, between competitors, in paragraphs 71-88 ibid.).  These presumptions are also intended to increase legal efficiency and certainty.
11. The execution of the restrictive arrangement and its actual implementation are not among the elements of the offense. This is also perfected without being required to show that the arrangement was actually executed or that an act was taken to implement it (Criminal Appeal 7399/95 Nehoshtan Elevator Industries v.  State of Israel, at paragraph 6 (April 19, 1998)).  "There is no need to take any action to implement the arrangement in order to be a 'party' to it.  The execution of the arrangement is not required for the purpose of perfecting the offense" (Borowitz at paragraph 76).  Accordingly, it was held that "when parties to an arrangement undertake to act in a certain way in their business and then do not act in accordance with the agreement, this does not negate the existence of the arrangement" (Criminal Case (Jerusalem District) 162/99 State of Israel v.  HaMashbir Lakhkalai in a Tax Appeal at paragraph 11 (7 October 1999)).

Nor is it required to prove a causal connection between the restrictive arrangement and the manner in which the parties to it operate, after it has been made (see also Criminal Case (Jerusalem District) 9865-10-12 State of Israel v.  Bar at paragraph 157 (13 January 2015)).  The prohibition on perfecting a restrictive arrangement does not obligate, according to its language or purpose, to prove that if it were not for the arrangement whereby one of the parties to it restricts itself, that party would have acted differently or that any of the parties to it would have actually implemented it.  An arrangement will not go beyond the scope of a restrictive arrangement: "Even if one or all of the parties intended to act in the same way in any event..." (Criminal Case (Jerusalem District) 22847-12-10 State of Israel v.  Bublil at paragraph 327 (September 13, 2018)).  In a similar vein, it was held that even if the actions of a party to the arrangement were based on its own independent considerations, this does not detach the action from the arrangement, and that "the mere existence of such considerations does not negate the restrictive arrangement.  Such considerations also do not negate the restriction on freedom of action, which is inherent in the arrangement.  There is also an inherent difficulty in clarifying an argument as to an internal motive of one kind or another in the basis of an action, which is carried out following the formulation of a restrictive arrangement" (Criminal Case (Jerusalem District) 28192-08-12 State of Israel v.  Angel, at paragraph 212 (July 9, 2015)).