Israel Competition Authority Director General Publishes Guidelines for Business Activities during State of Emergency

The Director General’s guidelines address several issues that may impose a burden on businesses’ activities during the state of emergency, with the aim of facilitating cooperation and enabling them to focus on manufacturing and business activities.

Highlights of the Guidelines

Cooperation between businesses

In general, competition law allows businesses to cooperate with each other without having to obtain an exemption or permit from the Director General or from another authority, provided they fulfill the criteria prescribed in the block exemption for joint ventures. The purpose of these criteria is primarily to ensure that such cooperation does not adversely impact competition.  

The Director General referred to the fact that the state of emergency could adversely impact various aspects of businesses’ operations, such as significant decreases in production capacity or in consumption, shortages of goods, delays in obtaining or renewing regulatory approvals, exceptional demands imposed on businesses due to the state of emergency, and more.

Against this backdrop, the Director General clarified that when these special circumstances arise and a business is unable to operate normally, cooperation between businesses, even among competitors, not only does not necessarily restrict competition, but rather may ensure the continued existence of effective competition in the long run.

The operative significance is that, during the state of emergency, it is likely that more instances of cooperation (including between competitors) may be sheltered under the block exemption for joint ventures. However, businesses must ensure the existence of the special circumstances that permit this. The Director General also stated that the Competition Authority is at the service of all businesses looking to receive guidance and answers to questions about such cooperation.

Non-enforcement of Food Law provisions pertaining to product displays

The Food Law contains clauses prohibiting practices whereby “major suppliers” are involved in the display of goods in the stores of “major retailers,” or dictate, recommend, or otherwise intervene in the display of goods (apart from specific exceptions). This prohibition applies to both major suppliers and major retailers.

The Director General announced that, until further notice, she does not intend to take enforcement measures against major suppliers and major retailers in respect of such practices that took place as of October 7 and until such time as she rescinds her guidelines or until some other as yet undetermined date.

The Director General issued her guidelines acknowledging the adverse impacts on the supply chain in the food industry, and based on the need to facilitate retail chains’ normal activities and to ensure the steady supply of products to end consumers. 

Streamlining merger transaction approval process

Under normal circumstances, parties to a merger that requires the approval of the Competition Authority’s Director General may not take any action tantamount to actually starting to execute the merger prior to receiving said approval. The Director General recognizes that during the current state of emergency in the Israeli economy, the mere waiting period for merger approval may cause irreparable damage to businesses seeking to merge.

Therefore, the Competition Authority will enable parties that filed merger notices, or that intend to file merger notices, to contact the authority to consider solutions to difficulties that may arise during the interim period, to the extent possible, until the Director General reaches a decision.

Postponement of deadline for responding to demands for data

The Director General announced the postponement of any deadline stipulated for responding to a demand for data on the Competition Authority’s behalf pursuant to provisions of the Competition Law, the Food Law, and the Law for Promotion of Competition and Reduction of Concentration. The duration of the postponement is the same as the number of days specified in the Minister of Justice’s announcements, as updated from time to time. At this stage, the regulations are in effect until October 20, 2023.

Diligence in Prohibiting Adverse Impacts on Consumers

In addition to the reliefs specified above, the Director General underscored the fact that the norms applying by virtue of the Competition Law are still in force today, including the prohibition on monopolists exploiting their power.

The Director General said the security situation is indeed raising concerns in the economy and business uncertainties. However, she noted that this crisis poses far more hardships on consumers than on businesses. Consequently, now is the time to be even more diligent about not harming consumers, let alone exploiting the situation for business gain at the expense of consumers.

Therefore, the Director General will monitor the developments in the economy and take measures within her purview against businesses that cooperate or take unilateral actions that exploit the state of emergency and behave in a manner that could harm competition and the public.

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Barnea Jaffa Lande’s Competition and Antitrust Department is at your service to answer any questions about the Director General’s guidelines or about business activities during the state of emergency. For assistance, please contact Advs. Gal Rozent, Irit Brodsky, and Ran Karmi.