Rare Acquittal in Israeli IT Cartel Case and an Important Message to Companies About Internal Compliance Programs

The Israeli District Court recently issued its ruling in the IT cartel case, one of the most significant competition law cases in Israel in recent years (Cr. 54589-02-17 State of Israel v. Sharon et al.).

The indictment included 18 charges, brought against leading IT companies, employees, and senior executives for coordinating bids and entering into restrictive arrangements in the IT sector. This case is important because it illustrates how courts currently assess competition law offenses, corporate liability, and the weight of internal compliance and enforcement mechanisms.

The court convicted most of the defendants on most of the charges and accepted the Israel Competition Authority’s position with respect to a large portion of the factual foundation presented before it.

The ruling is consistent with the broader judicial trend toward stricter criminal enforcement of competition law in Israel. Most recently, in Youngster v. State of Israel (Cr.A. 4475/24), the Supreme Court held that, as a rule, defendants convicted of cartel offenses should be sentenced to imprisonment and indicated a particularly stringent sentencing benchmark for such offenses. (For the full update, click here.)

Rare Acquittal in a Competition Law Case: Haim Shohat and Matrix

Our firm represented Haim Shohat, a sales employee at Matrix, who, along with others, was accused of coordinating bids during a mini-tender conducted by Israel Aerospace Industries’ computing center. The court acquitted Shohat of the offenses attributed to him on the grounds of reasonable doubt. Accordingly, Matrix was also acquitted of the charge attributed to it on the basis of Shohat’s conduct.

This is an unusual outcome in Israeli criminal competition law enforcement. Most indictments filed by the Competition Authority concern cartels—restrictive arrangements between competitors. Under Israeli law, for these offenses it is not necessary to prove that the arrangement actually harmed competition, or even that there was a risk of harm to competition. Proof that competitors reached an understanding or agreement (even a tacit one) regarding one of the matters specified in Section 2(b) of the Competition Law—such as price, market division, quantity, or type of products and services—is sufficient to establish the offense. Consequently, acquittals in cases like this are uncommon.

However, the court held that the prohibited understanding required for a cartel conviction had not been proven to the requisite criminal standard.

Broad Message to Companies: Internal Compliance Programs Carry Weight

Perhaps the most important takeaway from the ruling is not the acquittal itself, but rather the court’s comments during its analysis of Matrix’s liability for Shohat’s conduct, particularly in relation to Matrix’s internal enforcement and compliance program. The court noted that, even before the investigation commenced, the company had taken a number of steps designed to prevent competition law violations, including: 

• Implementing an internal compliance policy.
• Distributing the policy to managers and obtaining acknowledgement of its review.
• Providing competition law training to the company’s employees.
• Documenting employee participation in such training.

The court also noted that these measures may have carried weight when assessing the company’s liability, had it been proven that the employee committed the offense in question.

Although the court’s statements do not constitute a binding rule, they do have considerable practical importance. For years, internal compliance and enforcement programs have been viewed as important tools for mitigating companies’ competition risks. This ruling provides a rare judicial indication that courts are willing to substantively consider a company’s compliance efforts when assessing liability for a legal violation, rather than only as a significant consideration during sentencing.

The message to companies is clear:

an internal compliance and enforcement program is not merely a management tool to reduce the risk of statutory violations in advance. In appropriate instances, it may become a key component of a company’s defense when an employee or manager is accused of violating competition law.

Intensifying Trend: The Legislature Is Also Looking to Expand Corporate Liability

The court’s emphasis on internal compliance mechanisms aligns with a broader trend toward expanding corporate liability. For instance, the legislature is currently seeking to give more weight to how companies manage compliance risks and supervise their operations.

A memorandum of law was published on May 28, 2026 (in Hebrew), which seeks to significantly expand the range of sanctions that may be imposed on corporations convicted of criminal offenses. According to the explanatory notes, apart from criminal convictions, the tools currently available for punishing corporations—primarily fines—are limited and do not provide an adequate response to corporate criminality, particularly economic offenses.

The memorandum seeks to adapt the penal laws to a reality in which corporations are key players in economic activities, and proposes to give courts a variety of tools for contending with violations committed during corporate activities. At the same time, it reflects a regulatory trend that focuses not only on the offense committed, but also on whether the corporation implements supervisory, control, and compliance mechanisms to prevent violations in the first place.

Practical Implications for Companies and Officers

The ruling in the IT cartel case once again highlights companies’ and officers’ significant exposure to criminal enforcement proceedings for competition law violations. It also shows that courts may consider effective internal compliance and enforcement mechanisms implemented by companies.

Considering the steady rise in stricter law enforcement and punishment and the legislative initiatives to expand corporate liability, we recommend consulting with competition law experts before taking any action that could be construed as a violation of competition law.

We also recommend that companies take the following steps to minimize risks and both personal and corporate exposure to competition law violations:

• Develop and implement internal compliance mechanisms relating to competition law or, if such mechanisms already exist, update and customize them according to risks relevant to the company’s activities.
• Update policies according to risks relevant to the company’s activities.
• Provide periodic training to employees and officers and document them consistently.
• Ensure that supervisory, control, and documentation mechanisms are effective.

In appropriate circumstances, these measures may not only reduce the risk of violations from the outset, but may also become an important component of a company’s defense in the event of an investigation or enforcement proceeding.

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Adv. Gal Rozent is a partner and head of Barnea Jaffa Lande’s Antitrust and Competition Department.

Barnea Jaffa Lande’s Antitrust and Competition Department provides legal services across all aspects of antitrust and competition law. This includes advising Israeli and international companies on the development and implementation of internal compliance programs, employee training, competition risk management, ongoing regulatory compliance, and representation in investigations and enforcement proceedings before the Competition Authority. The department also represents clients in criminal and civil court proceedings, before the Competition Tribunal and the Director General of the Competition Authority, and before legislative and regulatory authorities. In addition, it advises clients on business transactions while providing ongoing legal counsel. The department is at your service to assist with any questions concerning provisions of the Economic Competition Law.