Legal Updates

Coordinating tenders between competitors is a violation of the Antitrust Law and fraud

March 31, 2020

A shareholder and manager of a water meter company committed 15 acts of coordinating tenders with competitors. For example, he reached an agreement with a competing company whereby it would not oppose to an appeal by the company to the Supreme Court for cancellation of a tender, in which the competing company won and in return the company would not compete in a tender of the Tel Aviv municipality or compete at a price agreed upon between the two competitors and be higher than the competitor's price. In another tender, by the Haifa Municipality, it was agreed that the company would buy the meters from a competitor and in return the competitor would not compete in the tender. One of the reasons the manager raised as requiring the coordination was that the companies were small and without coordination they could not compete with the competitor who controlled the market.
The Court accepted a plea bargain for convictions of offences under for the Economic Competition Act, 1988, and for fraud. It is irrelevant that the manager accepted the management of the company when a tender coordination habit already existed, because the responsibility is on the company's manager even if did not know that he was breaking the law. While the other managers and managers of the competing companies were fined at an average of about ILS 200,000, the manager was fined ILS 275,000 in addition to imprisonment of about 3 months.