The Cooperatition Incubator

Ofer Green, July 2009
Israel has had a competition act since 1959.  However, given the application and enforcement of competition law in Israel was not substantial until the mid-1990s – at least in comparison to the US, Canada, EU and Western European countries – the Israeli experience is not vast.

Voluntary agreements that involve any sort of “restrictive arrangement” (see definition of term in Article 2 of Israeli Restrictive Trade Practices Act 1988) must be approved by the Antitrust Tribunal.  The decision by the Tribunal regarding whether to approve a restrictive arrangement is based on “public interest” (see Articles 9-10), though among the “public interest” considerations, most can be attributed to economic/efficiency concerns.

A notable exception is the employment consideration (Article 10(6)).  The General Director of the Antitrust Authority is authorized to grant exemption from the requirement to obtain the approval of the Tribunal, though his/her exemption decision is based on competitive concerns alone (see Article 14).

Almost all exemption requests are granted by the General Director (see ‘Annual report on Competition Policy developments in Israel’, graph page 7), so that the number of cases reaching the Tribunal is small.  Nevertheless, in at least in one case (Antitrust File 4445/01 Supersol Ltd., et al. v. General Director of the Israel Antitrust Authority – unpublished), the Antitrust Tribunal weighed environmental concerns upon approving a restrictive arrangement.  The restrictive arrangement was between the major retail chains and beverage companies, regarding collaboration in order to establish and operate a recycling corporation.  The decision of the Antitrust Tribunal is brief, and thus no determination is possible as to whether environmental concerns actually trumped the efficiency consideration in this case, or perhaps were consistent with the latter. At any rate, the decision acknowledged non-efficiency, environmental, objectives as within the scope of antitrust adjudication. This case demonstrates that environmental concerns may be considered as promoting the “public interest” and afforded consideration as per Section 10 of the Act.

There is no data available as to the percentage of restrictive arrangements that the Tribunal approves, and certainly no available data as to the percentage of restrictive arrangements approved on the basis of non-efficiency considerations.  Such considerations take place only sporadically, and do not indicate any clear willingness to incorporate them into competition law.  Despite this, Israeli tribunals/courts have not rejected the possibility of factoring non-efficiency concerns into antitrust decisions, although there is no clear direction in this respect as of today.

See also: Israeli Restrictive Trade Practices Act 1988

• Federal Trade Commission and the U.S. Department of Justice, 2000. ‘Antitrust Guidelines for Collaborations Among Competitors’, Washington: Federal Trade Commission