Israel: Foreign Company Fined for Failing to Comply with Competition Authority’s Request for Information

The Israeli Competition Director General recently announced he had reached an agreement with the British pharmaceutical company Leadiant Biosciences. According to the agreement, Leadiant undertook to pay ILS 110,000 to the state’s treasury for failing to comply with the Competition Authority’s request for information.

This is the first time enforcement measures have been implemented against a foreign company for failing to comply with the Competition Authority’s request for information.

Excessive Price Suspicion

The Competition Authority issued the request to receive information from Leadiant Biosciences as part of an investigation into suspicions that it set an excessive price for a drug called Leadiant, a life-saving medicine used to treat patients suffering from a rare disease. Leadiant Biosciences manufactures Leadiant and MBI Pharma markets it in Israel. Upon completing its investigation, the Competition Authority issued a determination, the first of its kind in Israel, that MBI had abused its monopolistic position and charged an excessive and unfair price for the drug. (For an update about the ruling, see here).

Leadiant refused to comply with the request for information, claiming it was under no obligation to do so because it is a foreign company with no direct or indirect affiliation to Israel. In response, the Director General notified the company that its refusal is tantamount to a violation of provisions of the Israeli Competition Law, which is subject to a monetary sanction.

Following discussions between the parties, Leadiant complied with an updated (and limited) request for information and signed a consent decree, in which, as stated, the company undertook to pay ILS 110,000 without admitting to a violation of the law. In turn, the Director General undertook not to initiate additional enforcement measures in respect of Leadiant’s refusal to comply with the original request. The consent decree is open for public comments until the beginning of February and is subject to the approval of the Competition Tribunal.

Authority to Issue Information Requests

This course of action reflects the Competition Authority’s view that it has the power to request data and information from foreign companies for the purposes of its examinations or investigations, even for a company not doing business in Israel. Foreign companies should take into account that refusing to comply with the Competition Authority’s request for information could lead to enforcement proceedings against them.

It is unclear why the payment stipulated in the consent decree is relatively low. It may be due to the low business turnover of Leadiant in Israel (or due to other circumstances). Foreign companies should be aware that past offenders have paid sums reaching up to millions of shekels to the state treasury under consent decrees for failures to comply with the Competition Authority’s requests for information.

Furthermore, deliberate noncompliance with a request for information and in a manner that thwarts the Competition Authority’s examination or investigation could lead to a criminal investigation and to an indictment against the offender. In a past case, the officer involved was even sentenced to prison term (served as community service).  

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Barnea Jaffa Lande’s Competition and Antitrust Department is at your service to assist you and answer any questions in this regard.

Adv. Gal Rozent heads the Competition and Antitrust Department at Barnea Jaffa Lande.

Adv. Irit Brodsky is a partner in the Competition and Antitrust Department.