Business Restrictions

Antitrust Laws

Antitrust laws, also known as competition laws, are regulations that govern the conduct of businesses in order to promote fair competition by preventing or reducing market practices that limit competition among businesses. These laws aim to ensure free and open competition, benefiting consumers, economic growth, and social welfare.

On January 1, 2019, an amendment to the Restrictive Trade Practices Law, renamed the Economic Competition Law, came into effect in Israel. The Israel Competition Authority is responsible for safeguarding free competition in the market and promoting it. The authority operates in various areas, including overseeing transactions, enforcement, advising government bodies and the Knesset (Israeli Parliament), all to enable free competition and the benefits it holds for consumers, economic growth, and social prosperity.

The Competition Authority operates to focus supervision and law enforcement on practices that pose a significant risk to free competition while minimizing unnecessary regulatory and bureaucratic burdens on legitimate business activities that do not endanger free competition.

Investigations and Enforcement

The investigation department of the Competition Authority is tasked with probing suspicions of violations of the Economic Competition Law. Authorized investigators of the Competition Authority are empowered to demand information, documents, records, and other certificates from any person to ensure compliance with the law. They are also authorized to investigate any person for a violation of the law, enter any business premises, conduct searches, and seize any object that is reasonably believed to serve as evidence in a court case for a violation of the law.

The investigators have the authority to detain, arrest, and release suspects according to the Criminal Procedure Law (Enforcement Powers – Arrests), 1996. After completing an investigation, the investigation department transfers the case material to the legal department of the Competition Authority, which decides, based on the evidence, whether there are grounds to file indictments against the suspects for committing the violations.

Collusion, where companies agree not to compete, represents the most severe violation under antitrust laws. Cartels directly impact competition and can seriously harm consumers. Unlike in some other countries where there is also criminal enforcement against violations of antitrust laws, in Israel, only cartel offenses lead to criminal enforcement. The rest of the violations are subject to administrative enforcement.

It is important to note that as long as companies do not explicitly communicate and do not engage in any form of agreement to refrain from competition, no violation occurs. Therefore, if companies manage to reach an understanding without explicit communication – without any form of communication – that it is better for them not to compete, the outcome on the ground may be similar to that of an explicit cartel but entirely legal.

In such cases, a gray area is created, distinguishing between criminal and legal conduct. The response to such common occurrences is administrative enforcement. Recently, there is a tendency for the Authority to use administrative tools more widely instead of the criminal process.