The remaining defendants in this indictment, Zeiger and the companies: We, Harel and Triple C, are charged with the offense of a party to a restrictive arrangement under Section 47(a)(1) of the Law as drafted at the relevant time, together with Sections 2(a), 2(b)(1), 2(b)(3), 4 and 55A(b) of the Competition Law, as well as the offense of fraudulent receipt under aggravated circumstances, under Section 415 of the Penal Law. In relation to the defendants, the indictment refers to section 23(a)(2) of the Penal Law. Oshri and Nahum were attributed in the indictment the responsibility of officers by virtue of Section 48 of the Competition Law.
- The arguments regarding Gilad – here, too, Harel's arguments in its summaries that Gilad's actions to coordinate proposals were carried out against Harel's best interests should not be accepted (paragraphs 603-604 of Harel's summaries). As we have seen, even if Harel had an advantage, her win was not guaranteed. When the CBM was issued, Gilad expressed concern that Harel would lose the deal. This is how Zeiger himself explained Gilad's conduct. The evidence indicates that the coordination arrangement is intended to ensure Harel's winning, to exclude other possibilities and to prevent difficulties that may arise in Harel's path if lower competitive bids are submitted. Zeiger himself explained the competitive concern (P/224, paras. 36-44). Zeiger himself was a party to the coordination arrangement. Gilad even made sure to write to Zeiger about the coordination correspondence. This, too, undermines the claim that he acted contrary to Harel's interest (see also what is stated in paragraph 590 above).
- Therefore, the aforementioned defense arguments regarding Balam Galactica should be rejected.
Peretz's General Position Regarding the Procurement Proceedings - Note
- As already mentioned above, Peretz had a firm position regarding the correct course of action with regard to procurement in a civil appeal and strong criticism as to the manner in which things were conducted in practice. The defense sought to build on his testimony, and from statements he wrote in real time, to support its claims of competition for the sake of appearance only (see, for example, and at length, paragraphs 3, 9-10, 12 Sifa, 27-30, 37-38, 42-49 for the Wei summaries).
- We will now address these arguments. It should be noted at the outset that Peretz did indeed express his position that he should have acted differently and that the procurement procedures were problematic in his eyes. Peretz estimated that pricing and asking for quotes would not be effective under the circumstances he mentioned and would not lead to a better result. At the same time, as he clearly testified and as we also saw in Balam Galactica above, Peretz did not hold a contest on the face of it. When he was required to go out at the BLM, he asked to conduct real bidding and receive real offers, while trying to incentivize the suppliers to give the best offers. The defense's arguments on the basis of Peretz's position do not justify the coordination of improper proposals behind the client's back, and they do not qualify him.
- We will discuss the matter.
- Peretz's principled position was that a civil appeal should formulate framework agreements with IBM suppliers – that is, long-term agreements for the purchase of IBM products at a predetermined discount from the IBM price list. Peretz estimated that without a framework agreement, the procurement process is problematic and the ability of the procurement entities to influence is limited (e.g., p. 1565, paras. 30 - p. 1566, para. 4, pressure on Leshem and Saratani, Maman's manager, to execute framework agreements; p. 1559, paras. 1-3, in relation to IBM, the civil appeal was only the Comptroller General's agreement, which was expanded, as a framework agreement; p. 1559, paras. 15-17, without a framework agreement for procurement there is no leverage; p. 1616, 12-15, told Leshem dozens of times that it was necessary to go to IBM and exert pressure on it to make a framework agreement with a number of partners in the event of a civil appeal; p. 1754, s. 20, his purpose function was to obtain a framework agreement with IBM; See his assessment expressed in real time, N/82, p. 1787, paras. 23-p. 1788, s. 3, that a framework agreement with IBM resellers is required because it is not possible to conduct "real competition" once the technical entity has decided to integrate an IBM product into the project).
- Peretz testified that where equipment made by a certain manufacturer was required for the project – for example, IBM – that is, when there was no possibility of competition between different manufacturers, he assessed and testified that he also told others, that there was no point in pricing, that it would have no significance since "the game is over" (p. 1566, paras. 7-13). Elsewhere, he noted that he believed that pricing in this state of affairs would not advance the civil appeal from a commercial-business perspective, and called it "artificial pricing" (p. 1755, paras. 11-22; See also p. 1667, paras. 10-15, where he expressed his position that when a particular manufacturer is chosen, a single supplier should be excluded and not pricing). Peretz testified that in the situation of a single manufacturer, procurement is more limited, and that even if the manufacturer has several suppliers, "it is already a completely different game" since the manufacturer knows that his equipment is required (p. 1672, s. 22 - p. 1673, s. 2; See also N/137). Peretz estimated that to the extent that there are large gaps between the bid that IBM gave to one supplier and the bid it gave after the ability to compete between the suppliers and the ability of the procurement to have a "problematic" effect (p. 1559, paras. 27 - p. 1560, s. 5; p. 1777, paras. 18-23, where he confirmed that it was Urshitzer and IBM who determined who would sell at IAI; See also p. 1754, paras. 11-15, where he testified that despite this, "they did not go like a lamb to the slaughter" of IBM, and that there was a previous competition between manufacturers).
- Peretz insisted on the importance of integrating the procurement factors from the very beginning of the process, already in the early stages of characterization (p. 1565, paras. 10-11, he waged a world war over this; 1674, paras. 1-4), and in his testimony he expressed his assessment that when procurement entered the picture it was too late already after the suppliers and manufacturers had "already put three bullets in the net" (p. 1565, paras. 1-2; p. 1682, paras. 18-25, where he estimated that it was not possible to price at a later stage, but immediately afterwards explained the logic of contacting Bynet for a price quote in the Galactica Fleet; p. 1713, paras. 1-7, where he referred to the difficulty of the project's late application for procurement only in order to sign the order, in which case they would have to explain the pricing process in court).
- Peretz testified that he expressed these views to his managers many times, orally and in writing (p. 1590, paras. 23-26; p. 1591, paras. 4-6; p. 1599, paras. 21-23, wrote to Leshem and Sartani many times; see also N/82, N/137, and the additional evidence from the period after the indictment was filed). Peretz further testified that he contacted the internal auditor of the civil appeal at some point after the indictment was filed and complained to him that the procurement proceedings at IAI were "catastrophic" (p. 1646, paras. 2-6). He also claimed that his managers had abused him and tried to fire him because he was a troublemaker for them (p. 1647, paras. 22-1648, para. 11, where he also noted that he was not willing to act like Avi Menashe; p. 1637, paras. 17-21, where he confirmed that it seemed to him that there was a connection between his warnings regarding the procurement proceedings and the attitude towards him).
- However, Peretz's aforementioned positions and assessments do not constitute a defense for the defendants.
- Indeed, Peretz had criticism of IAI's procurement procedures. Peretz estimated that it should have been done differently and that in a situation in which it was determined that IBM-made procurement was required, and when one of the suppliers had already worked with the project personnel in characterizing the contents and with IBM's involvement, the pricing process and the request for quotations would not be effective and would not lead to better bids for IAI. That was Peretz's assessment. This is what he believed and believed.
- However – as we also saw in Balam Galactica discussed above – when it was required to ask for quotes and conduct bidding, Peretz did not conduct a competition for the sake of appearance only. Peretz conducted a truth-pricing process, with the aim of receiving genuine offers, and in an attempt to incentivize the suppliers to give optimal offers.
- As we saw above, Peretz's assessment that in certain circumstances the pricing would be ineffective or that it was pointless was an internal assessment. Peretz did not disclose his assessment of the competitors' suppliers. As he testified, "this is not the business of the suppliers" (p. 1591, paras. 1-6; See also Oshri's testimony that he never encountered a situation in which a client asked him to waive a transaction, p. 4320, paras. 9-10). Peretz did not even know about the coordination of the proposals. It was hidden from IAI. It is not for nothing that Peretz treated the coordination with severity when he was presented with the matter (see paragraph 579 above in relation to the Galactica Communications Department; this is despite the fact that he retroactively used the coordination as an additional reason to support his position that he was required to enter into a framework agreement with IBM, p. 1599, paras. 12 ff.).
- Peretz explained in his testimony that there are different levels of competition. The intensity of competition varies in different situations. Thus, according to him, when there is competition between manufacturers, it is a high-intensity competition; When it comes to competition between suppliers, when procurement enters the picture at an early stage, there will be substantive and real competition, even if at a lower intensity; And when the procurement comes in at a late stage after one of the suppliers has already worked with the project, there will still be competition, even if in his estimation, it is more limited. In any event, as he clearly emphasized, this is not a competition for the sake of appearance (p. 1689, paras. 2-14).
When Peretz was required to conduct a pricing, he conducted a real pricing in an attempt to maximize the advantages of the competition. He did not ask for fictitious or coordinated offers.