The Antitrust Commissioner intends to renew the validity and to amend nine block exemptions. Block exemptions are a central tool used by the Antitrust Commissioner to exempt categories of common commercial arrangements from the obligation of obtaining the Antitrust Tribunal’s approval. At issue are arrangements that do not raise any concern of significant harm to competition, even though they fall within the definition of a “restrictive arrangement” prescribed in the Antitrust Law.
In early May 2016, the Antitrust Authority published drafts of block exemptions for public comments. The drafts contain a number of amendments that would simplify the utilization of the current block exemptions.
Following are main amendments that the new Commissioner deemed necessary:
- Unlike the current situation, arrangements that comply with the provisions of the block exemptions concerning price, quantity, market segmentation and tenders will no longer require individual exemption applications to the Commissioner.
- When the application of any block exemption is contingent upon the parties’ market shares, the Commissioner’s approval shall be required only once a change occurs in the parties’ market share that exceeds the maximum prescribed in the relevant block exemption by more than 10%. So for example, the block exemption for exclusive distribution arrangements prescribes that this block exemption shall not apply if the exclusive distributor’s market share exceeds 30% after the agreement is signed. The significance of the amendment is that if the distributor’s market share was 25% when the arrangement was signed (and therefore, the arrangement fell within the exemption) but later, during the course of the arrangement, the distributor’s market share rises to 33%, at that moment the arrangement will require the commissioner’s approval, even though such an approval had not been required when the arrangement was established.
This is an important clarification and a reminder to parties that they are required to monitor the developments in their operating markets. Arrangements that are not considered as giving rise to competitive concerns at the time of their creation might become restrictive arrangements as a result of developments that transpire in the relevant markets over time.
- A number of block exemptions were amended at the request of the public, so that a permit by virtue of a block exemption will apply not only to an entity that is a direct party to the arrangement, but also to the person controlling it and other companies under that same control, since, in economic terms, they constitute a single unit.
The above relates to the version of the drafts as published on the Antitrust Authority’s website; however, we estimate that no far-reaching changes are expected in the final versions of the block exemptions, which are scheduled to come into effect in September 2016.