For example, Triple C claimed in its summaries that it was going to receive a special from IBM for the supply of Unix servers for the MPR project , and that it had a clear advantage (see paragraph 991 above), even though in fact at the end of the day it was actually Wii that won the supply of the servers (ibid.).
(See in general: Peretz's testimony, according to which there can always be surprises when pricing is made, p. 1688, paras. 4-6, and see regarding Peretz's position in paragraph 603 onwards, including paragraph 615 above; testimony of Shohat, p. 6871, paras. 5-13, that even when one of the suppliers is given priority, the others have a chance of winning, even if it is a small (or slim) chance, as he noted).
The defendants did not deal with these things in any real way. As stated above, the concern about the possibility that an unprioritized supplier would make an attractive offer and could win, is sufficient to drop the ground under the defense's arguments and show that there was a possibility of competition, that there was a competitive concern, and that the price adjustment arrangements were intended to remove this concern. In their summaries, the defendants raised arguments that competition against those who received priority is an "imaginary" competition, which relies on an unexistent and "immoral" scenario (according to which the manufacturer will ultimately prioritize another supplier) and that the legislature did not seek to create competition of "suicide bombers" who are willing to "cut veins" and lower prices (for example, paragraphs 35-37, paragraphs 71 of the Wee summaries, paragraphs 70 of Harel's summaries). These claims must be rejected. They do not deal with the evidence, including the cases cited above. In any event, the competitors are not in a position to give grades to the competition or its feasibility, and they are not in a position to enter into improper coordination arrangements on the basis of an assessment of the feasibility or probability of the competition. In fact, the fact that the defendants took the trouble to coordinate the prices of the bids, without any legitimate reason being given, indicates that they were facing competitive concerns that they sought to remove.
- The evidence raised additional indications that even when a certain supplier received a special from IBM, uncertainty and competitive fears still remained.
- Even when one of the suppliers received a special offer in hand and priority, the rate of preference – the difference between the price given to him by IBM and the price given to the others – was unknown, neither to the preferred supplier nor to the other suppliers (even if they knew about the prioritization itself). This is clearly evident from the testimonies of IBM personnel (e.g., Orshitzer, p. 2411, paras. 7-22; Lavid, p. 6491, paras. 15-28, IBM did not share the prices it gave to supplier B; p. 6441, paras. 28-30, the supplier does not know the extent of the advantage he received; p. 6569, paras. 15-22, the suppliers do not know the difference between them; p. 6570, paras. 23-24, p. 6573, paras. 2-4). This was also evident from the testimonies of the suppliers themselves (Naveh, p. 298, paras. 1-7, he had no idea about the gap; p. 298, paras. 7-15, he did not know whether he had received a deeper assumption than the others or not; p. 300, paras. 14-20; Oshri, p. 4368, paras. 14-15, p. 4365, paras. 15-22, a doubter who does not really know what the gap is between him and the one who is prioritized, can try to estimate based on past experience; see, e.g., 6491, paras. 28-30, it is possible that suppliers could have guessed a price environment, but they did not know).
The preference rate was also not fixed and could vary from transaction to transaction (Lavid, p. 6572, s. 30 - p. 6573, s. 1, p. 6573, s. 5-6, the difference could be a percentage and could be ten percent; Naveh, p. 297, s. 16-23, there were no standards regarding the gap, it could vary). As already stated above, the IBM Israel people with whom the defendants worked were not the ones who determined whether or not a preference would be given. Lavid also testified that he did not remember that he ever knew the percentages (p. 6570, s. 29, p. 6497, s. 23-25, and see also his assessment in the testimony that the gaps were not dramatic, p. 6572, s. 15-22; Naveh, p. 296, s. 15-17, Lvid is not authorized to give prices).
- To this, it should be added that the supplier's price quote to the customer is based on the supplier's purchase price from IBM plus its profit rate. However, from the perspective of each of the suppliers, the profit rate of the competing suppliers is also an unknown figure. To the extent that a competing supplier chooses to make do with a low profit in the transaction in question, its offer may be cheaper than the others' offers.
- As stated above, and as we saw in the hearing of the individual charges, it was the supplier and not the manufacturer who determined the final sale price to the customer. IBM itself did not set the sale price to the end customer, including a civil appeal (except for the maximum price limit when a special is given by hand), and in any case it did not determine who would be entitled to supply the contents of the equipment to the customer (see: Naveh, p. 296, paras. 19-22, Lavid was not involved in bidding for the customer; Orshitzer, p. 2400, s. 31-p. 2401, s. 8; IBM has no say in the sale price to the customer; and see also: 2402, paras. 16-24, with the exception of a maximum price limit in a special hand, it is the supplier who determines the sale price at his discretion; p. 2461, paras. 19-24; p. 2591, paras. 16-29, the person who ultimately determines who wins is the customer and not IBM, even if it gives priority; Labid, p. 6479, paras. 23-24, paras. 25-31, IBM did not know what the final price would be for the customer, even if IBM was also involved in communication with the customer regarding orders of magnitude or target prices; p. 6568, paras. 10-18, the decision at what price to sell to the customer is the supplier's and it will determine whether he wins; Peretz, 1560, s. 12-14, s. 18-20, p. 1773, s. 7-8, so Peretz was told in real time that the suppliers set the price, the mark-up; See also what Peretz wrote in real time (even though after the open investigation was opened), that IBM's salespeople engaged in a civil appeal do not deal with any costs or obligations to IAI, a draft position paper dated January 16, 2013, attached as part of the additional evidence). The defense argued that in certain cases the manufacturer (IBM or NetApp) was involved in determining the final price vis-à-vis the customer (for example, paragraphs 62-65 of the Harel summaries, paragraphs 155-159 of the Wii summaries). These arguments cannot be changed (even ignoring the fact that Lavid's words to which the defense referred, p. 6479, s. 18 - p. 6480, s. 6, were based on words written by Shachar to Lavid in an e-mail message N/188, which, according to Harel itself, as in para. 427 of its summaries, are not true; and as stated, Lavid testified that IBM did not know the final price to the customer, p. 6479, paras. 23-24). In any event, no basis was laid for such involvement in the proceedings of the police officers that are the subject of the charges herein (and exhibits N/397-N/408 did not relate to any of the unmanned aerial vehicles in the indictment; see also N/300, Ronen Noy's interrogation in the Authority). Moreover, no real evidentiary basis was laid for the involvement of IBM (or another manufacturer) in the coordination of price quotes between the suppliers, and not to mention that it was IBM that initiated or directed the coordination as alleged (the defense's arguments in this context were rejected above in an attempt to build, inter alia, from the emails N/97 and N/99, see, for example, paragraph 735 above).
- This state of affairs – when the degree of preference, to the extent that preference was given, changes and is unknown; And the rate of profit in each of the suppliers' bids is at its discretion and is not known – creating uncertainty for all suppliers, both for the supplier that will be prioritized and for others, and a competitive concern intended to incentivize all suppliers to give an optimal offer (and it is not for nothing that where one of the suppliers received a special offer in hand, the defendants did not present the price quotes that the other suppliers received from IBM and did not support the claim that the gap between the offers did not allow competition). Improper price coordination that removes this concern may inherently harm competition.
- The evidence further showed that even where one of the suppliers received a special offer in hand and priority, other suppliers could compete with it in a variety of modes of action: (1) by making an offer at a low price that embodies a low profit rate or even without a profit, or at loss prices when it was important to win the transaction (as we saw in the examples cited in paragraph 1077 above); (2) In transactions that included the purchase of equipment from various manufacturers, it was possible to overcome the prioritization of another with respect to the contents of the equipment of one manufacturer, by receiving preferential prices in relation to the contents of another manufacturer, and offering a competitive overall price (Oshri, p. 4362, para. 21 – p. 4363, para. 15; and see the conduct of the matter in Balam Tarp (the subject of the sixth indictment), where each supplier had a comparative advantage that would have allowed competition had it not been for the coordination arrangement); (3) A supplier that is not prioritized can see the importance of winning the transaction in order to meet IBM's sales targets in such a way that the winning will entitle it to refunds on all of its sales and become worthwhile and profitable even at a low price (Hershkovitz, p. 6644, paras. 12-20, see also P/533; see also Peretz's reference to the fact that there are situations in which one of the suppliers will have an interest in competing with a preferred supplier in order to reach a sales quota; a draft position paper dated January 16, 2013, attached as part of the additional evidence); (4) A supplier who is not prioritized can give a cheap offer and compete on the basis of existing products in stock that were previously purchased at a low cost as part of a large purchase or in the manufacturer's promotional offers (Shohat, p. 6871, s. 14 - p. 6872, s. 9, p. 6483, s. 1-6); (5) A supplier who is not prioritized may submit a competitive offer that will be cheaper than the preferred supplier's offer, also by way of reducing the cost of the service and installation components accompanying the purchase of the hardware contents (Zeiger, P/223, paras. 334-344; these statements should be preferred against the interest over other things that Zeiger said in his testimony, p. 6079, paras. 30-31, as if the ancillary components were null).
- The bottom line: The arguments should be rejected as if giving a special hand or prioritizing it would have ruled out any possibility of competition. In any event, such arguments do not justify or legitimize improper price adjustment that falls within the scope of the absolute holdings. Beyond that, the arguments should not be accepted on the factual level either. The evidence showed that in practice there were cases in which a supplier won that did not receive priority, that even in the case of prioritization, uncertainty and competitive fears remained, that suppliers had a variety of ways to try and compete even in the face of prioritization, and that the improper coordination of bid prices was intended to remove these competitive concerns and in any case created a fear of harm to competition.
- For the entirety of the hearing, it should be noted that the defense argued that the civil appeal personnel knew about IBM's special hand and prioritization mechanism, that they knew that prioritization does not allow competition, and that they held competition only for appearances, but because of the requirements in the civil appeal procedures and in order to "arrange" the procurement file (for example, in paragraphs 79-97 of Harel's summaries, and in paragraphs 35-37 and 58 onwards of the Wii summaries).
We referred to the repeated arguments that the proceedings of the Special Operations Division in our case were a prima facie competition, which we addressed above in the course of the hearing of the concrete charges. The claims were rejected. It is sufficient to refer to what is stated there. The argument in its general form does not change it.