Recently the Israeli Antitrust Authority has stepped up its enforcement measures, and the local Courts began imposing stricter penalties on violations of the Antitrust Law. As a result, the Israeli business community faces greater anti-trust compliance risks.

The Israeli courts, up until a few years ago, treated individuals convicted of restrictive arrangements with relative leniency, and limited the punishments to community service, probation and fines of no more than tens of thousands of NIS, except for the most clear cut cases of cartel establishment and management.

The turning point in sentencing came with the ruling in the Shufersal affair, as Effie Rosenhaus and Eliezer Gidor were convicted of attempting to establish a restrictive arrangement and sentenced to imprisonment. The increase in the severity of punishment trend, continued in the “Bread Cartel” affair, in which the District Court sentenced several of the defendants to a year in prison, in addition to suspended sentences and fines of hundreds of thousands of NIS. Recently, the Antitrust Authority filed an appeal with the Supreme Court in this matter, requesting that the punishment of the defendants be more stringent and nearer to the top punishment limit of five years imprisonment and a NIS 4 million fine. This decision is joined by additional verdicts of the past few weeks, in the matter of the Veterinary Medical Association and in the matter of the price-fixing affair in the Meteorological Service tender.

The new regulatory reality requires business managers to fully comprehend the implications of any inclusion of restrictive arrangements (i.e. exclusivity clauses or non-compete clauses) in their agreements.

The trend towards increased enforcement and the stricter punishment emphasizes the importance of consultation with relevant professionals prior to making any restrictive arrangement, regardless if these arrangement is a vertical arrangement, whose impact on the competition depends on the circumstances, and in many cases is likely to be justified as having a legitimate business purpose, together with having an insignificant effect, if any, on the competition.