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07 August 2008
The relatively small size of the Israeli economy and its geographic isolation are the main reasons why in many markets local demand can sustain the effective activities of only a few companies. The multi-channel television market, the banking market, the mobile telecommunications market, the daily newspaper market and various kinds of market within the food sector are all examples of this economic reality.
A recent proposed amendment to the Antitrust Act, endorsed by the Israeli Antitrust Authority, presents far-reaching changes with respect to regulation in sectors lacking a significant number of competitors. This is innovative legislation which provides the antitrust commissioner with extensive powers, setting a possible precedent that other western competition regimes may follow.
The proposed bill authorizes the antitrust commissioner to determine that a group of corporations in a market constitutes a concentrated group when the following cumulative conditions apply:
The proposed bill further empowers the antitrust commissioner to issue instructions to members of the concentrated group, with the purpose of preventing harm to competition or significantly increasing competition. Among other things, the commissioner is authorized to:
This list is not exhaustive and the commissioner has the authority to issue further instructions to prevent harm to competition or significantly increase competition.
The proposed legislation may signal a change in the traditional role of the Antitrust Authority. While the authority's main focus today is maintaining competition as an enforcement agency, under the proposed legislation it may shift its focus to fostering competition as a regulatory agency. This change may be of great practical importance and have cross-border implications in cases where regulatory measures are applied towards non-Israeli-based companies that are selling into and maintaining a presence in Israeli markets.
Some may argue that giving an antitrust authority the power to shape and reshape markets at will is unwise. There is a world of difference between legislation prohibiting market participants from harming competition and legislation that turns regulators into market planners, trumping property rights (without compensation), overcoming the natural development of markets and replacing their invisible hand with the visible intervention of a regulator.
For further information on this topic please contact David Tadmor, Shai Bakal or David Gideoni at Tadmor & Co by telephone (+972 3 684 6000) or by email (firstname.lastname@example.org or email@example.com or firstname.lastname@example.org).
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