Israel – Accession Report on Competition Law and Policy 2011
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Israel – Accession Report on Competition Law and Policy 2011 This Review of Competition Law, Policy and Enforcement in Israel is part of a series of reviews of national policies undertaken for the OECD Competition Committee. It was prepared as part of the process of Israel’s accession to OECD membership. The Competition Committee was requested to examine Israel’s position with respect to core competition features and to provide OECD Council with a formal opinion on the willingness and ability of Israel to assume the obligations of OECD membership. In doing so, the Competition Committee assessed the degree of coherence of Israel‘s competition law and policy with that of OECD Member countries. This report, prepared as part of the Competition Committee’s accession review, highlights some of the key challenges facing Israel in its implementation and enforcement of competition policy. After completion of its internal procedures, Israel became an OECD member on 7 September 2010. Competition Law and Policy Reviews Competition Law and Policy in Israel 2011 The Review of Competition Law and Policy in Israel was prepared as part of the process of Israel’s accession to OECD membership. The report describes the policy foundations, Competition Law and Policy Reviews substantive competition law and enforcement experience, institutional structure as well as treatment of competition issues in regulatory and legislative processes. The review Competition Law and Policy Reviews Reviews Policy and Law Competition then examines these findings under three assessment themes: the current situation Competition Law of competition policy and enforcement; the magnitude and direction of change in competition policy over the last 5-10 years; the extent of conformity with the particular OECD competition recommendations. and Policy in Israel 2011 Competition Law and Policy in Israel2011 in CompetitionPolicy and Law Please cite this publication as: OECD (2011), Competition Law and Policy in Israel 2011, OECD Publishing. http://dx.doi.org/10.1787/9789264097667-en This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. Visit www.oecd-ilibrary.org, and do not hesitate to contact us for more information. ISBN 978-92-64-09766-7 24 2011 02 1 E -:HSTCQE=U^\[[\: Competition Law and Policy in Israel 2011 This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. ISBN 978-92-64-09766-7 (PDF) Series: Competition Law and Policy Reviews ISSN 2220-9158 (online) Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda. © OECD 2011 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d’exploitation du droit de copie (CFC) at [email protected]. FOREWORD This review of Competition Law, Policy and Enforcement in Israel is part of a series of reviews of national policies undertaken for the OECD Competition Committee. It was prepared as part of the process of Israel’s accession to OECD membership. The OECD Council decided to open accession discussions with Israel on 16 May 2007 and an Accession Roadmap, setting out the terms, conditions and process for accession, was adopted on 30 November 2007. In the Roadmap, the OECD Council requested a number of OECD Committees to provide it with a formal opinion. In light of the formal opinions received from OECD Committees and other relevant information, the OECD Council decided to invite Israel to become a Member of the Organisation on 10 May 2010. The Competition Committee (the “Committee”) was requested to examine Israel’s position with respect to core competition features and to provide Council with a formal opinion on the willingness and ability of Israel to assume the obligations of OECD membership. In doing so, the Competition Committee assessed the degree of coherence of Israel’s competition law and policy with that of OECD Member countries. This report, prepared as part of the Competition Committee’s accession review, highlights some of the key challenges facing Israel in its implementation and enforcement of competition policy. The review found that Israel’s comprehensive Restrictive Trade Practices Law (the “Law”) deals substantively with restrictive agreements, monopoly and mergers. Hard core cartels are ordinarily prosecuted as per se violations. The review noted that administrative and judicial decisions applying the competition law show methodological sophistication informed by close attention to contemporary judicial and academic analysis both in Israel and world wide. The Israel Antitrust Authority (IAA) which was established as an independent body has now matured into a highly respected agency, and it is expected that the resource challenge will be overcome to maintain the IAA’s current stature. COMPETITION LAW AND POLICY IN ISRAEL © OECD 2011 3 The review also stressed the need to devote particular attention to improve IAA’s capacity to cooperate with foreign competition agencies, specially by modifying the statute that limits exchange of confidential information to cases involving criminal conduct. Other priority areas for improvement include increasing deterrence through stricter sentencing of hardcore cartel participants, increased use of leniency and injunctions, adjustment of market share criteria in merger control to improve objectivity. The review of Competition Law, Policy and Enforcement in Israel was conducted on the basis of a comprehensive self assessment by the Israeli authorities and Israel’s answers to a detailed questionnaire, supplemented by information gathered from a Secretariat fact finding mission, interviews with public officials, markets participants, academics and relevant literature. The draft report was discussed with representatives from Israel at the Competition Committee meeting in October 2008. This final version of the report reflects the situation as of February 2009. It is released on the responsibility of the Secretary General of the OECD. This review was prepared by Jay Shaffer, Michael Wise and Patricia Hériard Dubreuil, under the overall supervision of Robert Ley of the Directorate for Enterprise and Financial affairs. This background report was submitted to assist the Competition Committee in assessing Israel’s willingness and ability to assume the obligations of OECD membership with respect to competition policy. It is based on the Initial Memorandum that Israel submitted concerning the compatibility of its laws and policies with OECD principles, responses to the Secretariat’s follow-up questionnaire, and findings from the Secretariat’s fact-finding mission and research. The report describes the context and foundations of competition policy, substantive law and enforcement experience, institutions, special exclusions and sectoral regulatory regimes, and the treatment of competition issues in regulatory and legislative processes. The concluding section summarises these findings in accordance with the three themes that the Committee prescribed for its assessment: the current situation of competition policy and enforcement, the magnitude and direction of change in competition policy over the past five to ten years, and the extent of Israel’s conformity with the particular recommendations in the OECD competition policy instruments .* * The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. 4 COMPETITION LAW AND POLICY IN ISRAEL © OECD 2011 TABLE OF CONTENTS Executive Summary ..................................................................................... 7 1. Foundations ...................................................................................... 11 2. Substantive issues: content and application of the competition law ...................................................................... 14 2.1 Restrictive arrangements .......................................................... 14 2.1.1 Horizontal restrictive arrangements.......................................... 20 2.1.2 Vertical restrictive arrangements .............................................. 25 2.2 Monopoly ................................................................................. 28 2.3 Mergers ..................................................................................... 35 2.4 Unfair competition .................................................................... 46 2.5 Consumer protection ................................................................ 47 3. Institutional issues: enforcement structures and practices .......... 48 3.1 Competition policy institutions ...............................................