As far as the cloud of reckoning between the parties is concerned, it is necessary to removeand allow sunlight to emerge. For this purpose, it would be appropriate to appoint an investigative accountant, taking into account the great difficulty of the parties to converge on an equal valley. Therefore, this judgment will be partial. At the same time, I will address various disputes that have been raised regarding the proper format of accounting.
- I will move on to examine things as they are.
Contractual Clauses Restricting Competition - A Suspicious Legal and Judicial Perspective
- The starting point of the discussion lies in the importance of free competition - its importance to the general and its importance to the individual.
- In general, it is free competition that underlies modern Western markets. This is an infrastructural value not only in the world of economics but also in the world of law. As is well known, "there was the doctrine of free competition for an infrastructure doctrine in the legal system in Israel" (the words of the Honorable Judge, as he was then called, Cheshin in another civil hearing 4465/98 Tivall (1993( Ltd. Chef Hayam (1994( Ltd., IsrSC 56(1( 56, 79 (2001( (hereinafter: the Tivall case).
This spotlight aimed at the competition is no coincidence. "Free competition is essential for increasing efficiency in the economy, for the development and growth of the economy; Because competition is the optimal guarantee of obtaining the best product and service under the best conditions; Because competition encourages new initiatives, leads to the replacement of old factors of production with more efficient and better means of production; because competition helps to transfer resources to more useful channels of activity" (ibid.).
And from the perspective of the individual, it is free competition that enables him to realize himself and his skills, and to put them to the cruel test of the market and of people. As the Honorable President Barak ruled, "Free competition is a cornerstone of any system of democratic government, as it is a prominent feature of the individual's freedom to realize his autonomy" (Civil Appeal 2247/95 Antitrust Commissioner v. Tnuva Cooperative Center for the Marketing of Agricultural Produce in Israel Ltd., IsrSC 52(5( 213, 229 (1998). Indeed, there is a very close connection between the basic constitutional right of freedom of occupation and the value of competition. "In a long series of rulings, the Supreme Court has ruled that freedom of occupation extends to freedom of competition as well. 'Freedom of Occupation Derives Freedom of Competition' (Aharon Barak, Basic Law: Human Dignity and Liberty and Basic Law: Freedom of Occupation: Constitutional Rights 1641 (Volume Three, 2023).
71. And when we speak of free competition, it can only exist in an open market. "The market should be open not only to new buyers, but also to new sellers. Otherwise, a situation will arise whereby the existing merchants will be granted a monopoly on the market. This situation is undesirable. It gives an advantage to those who have succeeded in taking over the market at a given moment, and it perpetuates its takeover without regard to the question of whether it contributes to the public welfare" (Nili Cohen, "Commercial Competition and Freedom of Occupation", Iyunei Mishpat 19 353, 354 (1995( (hereinafter: Cohen).
The Adverse Impact of Contractual Restrictions on Competition and Occupation
72. Free competition and the open market can arise enemies who seek their evil. Economic factors can join together and reach the following arrangements that will benefit them, while harming competition and the public interest. These are dealt with by competition law, first and foremost the Economic Competition Law, 5748-1988, which fights an all-out war against restrictive arrangements (see section 2 of the law). and "a restrictive arrangement is an arrangement made between persons conducting business, whereby at least one of the parties restricts itself in a manner that is likely to 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" (ibid., in section 2(a(). I will not deal in this judgment with the application of the provisions of the said law to the parties before us.
73. Competition and the free market are also liable to be harmed by the virtue of contracts, which entities operating in the industry will enter into with each other. A typical example of this is contracts in which one party undertakes not to compete with the other. These are contracts that restrict the freedom of occupation of one party, in order to protect the interests of the other party. But it is clear that these contracts have been and will be viewed with suspicion, in view of the high status given to freedom of occupation in those days, and especially at this time.
Today, freedom of occupation, as a constitutional right, states that "every citizen or resident of the state is entitled to engage in any occupation, profession or occupation" (section 3 of the Basic Law: Freedom of Occupation). It is true that this right imposes a direct obligation on "any of the governmental authorities" (section 5 of the Basic Law), and it is clear that private entities are not among the government authorities or administrative authorities. Still, even in private law, such contractual restrictions were abolished because they were considered to contradict public policy. As is well known, "a contract whose conclusion, content or purpose are illegal, immoral or contrary to public policy is void" (section 30 of the Contracts (General Part( Law, 5733-1973 (hereinafter: the Contracts Law). Against this background, "the basic assumption in the past was that any restriction on freedom of occupation, even if it derives from a contract that the parties took upon themselves of their own free will, is contrary to public policy, and the argument to the contrary is that the evidence is on him" (Cohen, at p. 372).