These provisions changed the arrangement set forth in section 48 in its previous version, the rationale on which it was similar. In accordance with the previous arrangement, no independent supervision obligation was established and it was determined that "if an offense under this law was committed by a group of persons, any person who, at the time of the offense, was in that group of persons, an active manager, a partner - except for a limited partner - or a senior administrative employee responsible for that field will also be charged with the offense, if he does not prove that the offense was committed without his knowledge and that he has taken all reasonable measures to ensure that this law is observed."
In accordance with the transitional provision set forth in section 55A(c) of the Law in our case, the provisions of the Law as amended apply (see also: Criminal Case (Jerusalem District) 24177-02-17 State of Israel v. Belfer in paragraphs 14-15 of the judgment (September 9, 2019); there was no dispute about this, see, for example, paragraph 8 of the request of defendants 1 and 3 of November 23, 2020). It was held that section 48 of the Law, even after its amendment, expresses the concept of imposing criminal liability on an officer of a corporation who did not take steps to ensure the fulfillment of the provisions of the Law, while in this context a lenient sentence was prescribed in relation to the previous law (Criminal Case 22847-12-10 State of Israel v. Bublil at paragraphs 131-136 (January 24, 2019)).
- The purpose of the aforementioned provisions is to incentivize the officers of the corporation to take measures to ensure the compliance with the provisions of the law and to prevent the commission of offenses within the corporation in order to protect the public interest in competition. It was held in this context, even before the amendment of the law, that "... Fulfilling a managerial role in a corporation involves a heavy responsibility, designed ... also to ensure the public's interest. Prohibited restrictive arrangements that harm the free competition between different dealers, cause harm ... The consumer public, and indirectly the public as a whole, are also harmed by their existence. The criminal liability that section 48 of the law imposes on managers and other officers of the corporation is a central and important guarantee for safeguarding the public's interest and preventing harm to it... A corporation manager is obligated to take - proactively, and even in the absence of a fear of committing an offense - reasonable measures to uphold the provisions of the law" (Criminal Appeal 4148/03 Yishai Cohen v. State of Israel (5 January 2004); Criminal Appeal 4783/09 Schulstein v. Antitrust Authority, paragraph 33 (September 16, 2010)).
- In terms of the elements of the offense, the accuser must prove that the defendant is an officer - including an active manager of the corporation - and that he breached his duty to supervise and do everything possible to prevent an offense under the law. With regard to the last component, the accuser will be able to prove that an offense under the Competition Law was committed by the corporation or one of its employees, in which case a presumption of breach of the supervisory duty will apply. In all that is said in "active manager", it was held that the general purpose of the Competition Law and the specific purpose of the provision regarding officers' liability "require that the term 'active manager' be interpreted in such a way that it will apply, at a minimum, to those officers who have the power to prevent (or reduce) the company's involvement in the commission of offenses under the law", including due to the connection between their position and the field in which the offense was committed (Borowitz at paragraph 173; Additional Criminal Hearing 5189/05 Ayalon Insurance Company in Tax Appeal v. State of Israel at para. 23 (April 20, 2006)).
- When the accuser proved that the defendant was an officer and that such an offense had been committed, a presumption arose that the defendant had breached the duty to supervise and do everything possible to prevent an offense. This is unless the defendant proves that he did everything possible to fulfill his duty (section 48(b) of the Competition Law; in the previous version, he was required to prove that the offense was committed without his knowledge and that he took all reasonable measures to ensure that the law was observed). The burden of persuasion to contradict the presumption rests on the defendant at the level of the balance of probabilities (High Court of Justice 3200/22 Erez v. Competition Authority at para. 24 (February 6, 2023); Criminal Case (Jerusalem District) 366/04 State of Israel v. Biderman at paragraphs 240 and 278 (January 20, 2010)).
The Offense of Fraudulent Receipt
- In some of the charges, the defendants are also charged with the offense of fraudulent receipt. Section 415 of the Penal Law states that anyone who receives something fraudulently shall be sentenced to three years' imprisonment. In accordance with the end of the section, if the offense was committed under aggravated circumstances, the person who receives imprisonment for five years.
- The social value protected by the offense of fraudulent receipt is the freedom of will, freedom of action and freedom of choice of the fraudster (Criminal Appeal 8573/96 Mercado v. State of Israel , at paragraph 71 (December 18, 1997)). Harm to these means that if all the facts had been laid out before the deception, it is possible that he would have acted or should have acted differently than he had acted (ibid., at paragraph 76; and see also Criminal Appeal 752/90 Barzel v. State of Israel , at paragraph 48 (March 1, 1992)).
- The factual element of the offense includes two components: fraud - the presentation of a false claim, and acceptance of something by virtue of such a claim; the last component is a consequential component, which also includes an element of the required causal connection between the representation and the result (among many, criminal appeal 8080/12 State of Israel v. Olmert, at paragraph 122 and the references therein (September 28, 2016)).
- Fraud is defined in section 414 of the Penal Law as "a claim of fact in a matter in the past, present or future, which is made in writing, orally or in conduct, and which the person who claims it knows that it is not true or does not believe that it is true." This is a broad definition. It was held that fraud can also be "done by conduct and not necessarily by a positive representation in word or in writing, and conduct is sufficient, from which it can be inferred that there is a certain state of affairs, and even the concealment of a fact may amount to fraud" (Criminal Appeal 593/81 Mandelbaum v. State of Israel, para. 3 (April 19, 1982)).
- In the case before us, the alleged fraud lies in the fact that a false representation was made when submitting bids in a competitive proceeding - mainly in the framework of a request for quotation proceedings - according to which the bids were submitted independently, without consultation, coordination or contact with another bidder, and in any event, the matter of coordination between the defendants was not disclosed. Where we are dealing with a competitive proceeding, on which the existence of free and fair competition is the foundation, it has already been ruled that prior coordination between the participants omits the main basis for the proceeding, and the mere participation in it without informing the principal of the coordinating cannot be interpreted except as a representation of the lack of such coordination (Criminal Case (Jerusalem District) 9890-10-12 State of Israel v. Rabinovich at paragraph 148 (May 4, 2014); The Ben Dror (District) case, at paragraph 32). It was also ruled that the very submission of "backup proposals" for the sake of appearance "constitutes in itself a false representation, since these are not proposals submitted in order to win, but rather proposals intended to catch the eyes of the members of the tenders committee, as if it were a tender conducted on the basis of real competition, while the prices were determined in advance by the opinion of the bidders, including the agreement as to which of the proposals would be the winning bid" (Criminal Case (Jerusalem District) 18291-12-12 State of Israel v. Bloa at paragraph 291 (23.1.18); See also Criminal Appeal 6339/18 Balwa v. State of Israel, at para. 28, p. 110 (January 15, 2020)). It was further ruled that a false representation due to non-disclosure of the coordination of the proposals is "... A matter of incomparable substantiveness, when it comes to a competitive proceeding" in the Ben Dror (District) case, at paragraph 735).
- Receipt of a thing - The term "matter" was defined in section 414 of the Penal Law as including "real estate, movables, right and benefit". It was held that this is a broad and flexible definition that introduces under its wings many different types of advantages that arise to a person as a result of the act of fraud, that there is no need for the 'thing' to have tangible economic or material characteristics and that there is no need for the fraudster to feel a clear or tangible loss or damage as a result of accepting the matter, and it is possible that the harm to him will amount to the denial of his freedom of will and discretion by the fraud (among many, Criminal Appeal 3517/11 Shimshon v. State of Israel , para. 32 (March 6, 2013)).
It was held that the assumption of the fraudster, which entails an infringement of his freedom of judgment and decision, is a "thing". In this context, it was stated that: "The protection of the aforementioned social value is certainly appropriate with regard to the fraudulent assumption of a person who has the authority to act in accordance with the law, when the authority is granted in order to serve the public interest. When a person fraudulently assumes the opinion of a person with such authority, regarding facts that are relevant in his case (of the fraud), he disrupts the judgment and decision of the fraudster in the exercise of the authority and its exhaustion. For if all the facts were revealed to the deceiver, it is possible that he would have acted, or he would have been obligated to act, in the same matter, within the framework of his authority, differently than he did. This risk the fraudster, for his own reasons, sought to remove from himself, and when he obtained what he wanted, he thus gained the benefit of the act of fraud. In other words, by "taking presence" the fraudster gained peace of mind for himself because of the risk that he would face a different governmental decision, which he sought to evade by the fraud" ( Barzel at paragraph 47). These words are relevant to the case before us, in which the accuser claims that what was accepted was the satisfaction of the summoners, to whom various defendants submitted bids in competitive proceedings, without disclosing the coordination in which the bids were tainted.