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The antitrust field is an extremely important aspect of any business activity, which many do not give the place it deserves.

A restrictive arrangements that was not preapproved by the Antitrust Tribunal is a criminal offense of all parties to the arrangement. Additionally, criminal liability is attached also to directors and officers of corporation who are parties to such arrangement. The Israeli Antitrust Law defines a restrictive arrangement very broadly to include any arrangement “entered into by persons conducting business, according to which at least one of the parties restricts itself in a manner liable to eliminate or reduce the business competition between it and the other parties to the arrangement, or any of them, or between it and a person not party to the arrangement.” The term “arrangement” is also defined very broadly defined to include any arrangement ” whether express or implied, whether written, oral or by behavior, whether or not legally binding.” The Courts construed such definition to include any coordination between people whose purpose is to create a restriction on competition and as such does not require the showing of intention to agree or specificity as usually required to form a binding contract. Moreover, for a restrictive arrangement to exist only a very low level of coordination between the parties is required and there is no requirement for an explicit agreement. An arrangement imposed by one side on the other will be considered as a restrictive arrangement.

A merger transaction may also be require to be reported to the Israeli Antitrust Authority and in some cases the actual approval of the Antitrust Commissioner. The Antitrust law may also create a personal liability for directors and senior officers in the company in the event of a breach of the law, and from 2012 also allows administrative procedures of imposing financial sanctions by the Antitrust Commissioner. Not less important, non-compliance may sometimes render a transaction illegal and prevent it. The definition of a “merger” in the Israeli Antitrust Law is much broader than the equivalent definition in other legislation and also includes the purchase, directly or indirectly (including through a contract that does not contain any acquisition of shares) of the main assets of the company or the acquisition of company shares which gives the purchaser more than a quarter of the voting power in the company, the power to appoint directors or the right to the company’s profits. The law requires an antitrust pre-approval (and the Commissioner may approve the merger, oppose it or set preconditions thereto) when the merger creates a monopolistic market share to the parties to the merger, including in the production, sale, marketing or purchase of certain assets and similar assets or the provision of a particular service and a similar service or when a party to the merger is a monopoly (whether a declared monopoly or a monopoly in fact), i.e has a share of more than half of the total supply or demand of certain assets, or more than half of the supply or demand of certain services, whether in the whole country or in a particular region. Naturally, the definition of the market has a large influence in determining the size of the market share of the merging parties and may be subject to interpretation, which makes it vital not only to review in advance the antitrust angles of the transaction but also to ensure that if the transaction requires antitrust approval, it is not carried out in any manner until approved by the Antitrust Authority. The law requires an antitrust pre-approval not only in the case of a monopoly, but also when the combined sales turnover of the merging companies is higher than ILS 150 million (about USD 40 million) and the sales turnover of each of the parties to the merger exceeds ILS 10 million (about USD 3.5 million) (which amounts are updated to reflect increases in the Consumer Price Index). Breach of the reporting obligations under the antitrust law is a criminal offense as so is the non-compliance with preconditions stipulated in a merger approval. In case of a corporation, the offence may also be deemed a personal offence of any active manager and any senior managerial employee responsible for the relevant field if such manager cannot prove that the offense was committed without such manager’s knowledge and that such manager took all reasonable steps to ensure compliance with the law. As mentioned, as of 2012 the Israeli Antitrust Authority is also empowered to order monetary sanctions in certain, which may reach up to an ILS 1,000,000 (about USD 260,000) in case of a senior managerin a small corporation and up to about ILS 25 million (about USD 66 million) in case of large corporations. Thus, it is crucial to consult a lawyer specializing in the Israeli antitrust law at the early stages of any transaction that may be subject to antitrust law issues and to ensure full compliance with the antitrust requirements.

Our firm deals with any issue related to antitrust. Included in such area are antitrust issues in agreements, approval of antitrust authorities for transactions or restrictive arrangements, attacking arrangements due to antitrust issues, disputes involving antitrust issues and defense in criminal proceedings involving antitrust issues.

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