In the current update we will describe the latest Israeli Commissioner's decision to impose, for the first time, an administrative fine on a small firm who failed to respond to a data request.
We will also remind you that this year major changes in two statutory exemptions come into force: the agricultural exemption (already replaced by a narrower and more complex version) and the exemption for mutual exclusivity for marketing purposes (which is about to expire on August 25, 2015).
First Fine Imposed for Not Responding to Data Request
The Commissioner used, for the first time, his power to impose an administrative fine on a company that did not adhere to a data request.
The Restrictive Trade Practices Law, 1988 (the "RTPL") allows the Commissioner to impose administrative fines ("monetary penalties" or "financial sanctions") inter alia if a data request was not adhered to.
According to the RTPL, the maximum relevant penalty for a large company (whose turnover exceeds 10 Million NIS - ~€2.3M, ~$2.6M) is 3% of its turnover, and up to 8 Million NIS (~€1.86M, ~$2M); and the maximum penalty for a small company (whose turnover does not exceed 10 Million NIS) and for a natural person is 300,000 NIS (~€69,000, ~$78,000).
Guideline 1/12: on Enforcement Procedures for the Use of Financial Sanctions states that failure to respond to data request will generally be dealt with by administrative sanctions. Nonetheless, in cases of intentional or malicious violation, criminal sanctions may be applied.
On May 31, a fine of 20,000 NIS was imposed on Beit Milano (the "Company") – a small underwear company.
According to the Commissioner's decision, IAA representatives sent the Company a data request on December 2, 2014, during the review of a merger between parties unrelated to the Company. In Israel, merger review must be concluded within 30 days, and under the current regime, the Commissioner is dependent upon parties' voluntary consent or the decision of the Antitrust Tribunal for extension of the period (see ourclient update on proposed reform). The Commissioner's decision mentions that the data from the Company was necessary for reviewing the merger.
According to the Commissioner's decision, when the request was not answered, despite repeated requests and reminders, IAA's investigators raided the offices of the Company on December 31, 2014. Only then did the company's representatives relay the relevant information to the IAA's team.
The Commissioner's decision to impose a fine on the Company mentions that the information was only delivered as a result of the investigation, and so the fact that the information was eventually received does not decrease form the Company's responsibility, and neither does the fact that the Company's manager was, at the time, outside of Israel.
The fine is relatively low compared with the maximum allowed fine (as mentioned above, 300,000 NIS maximum). Among the reasons mentioned by the Commissioner for reducing the fine were the precedential nature of this decision and the poor financial state of the Company, whose turnover decreased dramatically in 2013 and 2014 compared to 2012.
Note that, being a private company, having its financial state of affairs exposed to the public is also a somewhat unpleasant consequence, besides the fine itself.
This case demonstrates, yet again, that the IAA aspires to enforce the RTPL on every company – big or small.
Changes in the Statutory Exemptions - Reminder:
The Statutory exemption for agreements concerning agricultural products – produce, eggs, milk and the like – was narrowed. The change came into force on March 26, 2015.
The main effect of the change is that the exemption no longer applies to agreements between two or more wholesalers, regardless whether farmers are party to such agreements. An agreement between one wholesaler and several farmers may be exempt under certain conditions.
The statutory exemption for agreements with mutual exclusivity clauses between a provider and a customer, for marketing purposes, has been cancelled entirely, and shall expire on August 25, 2015. Agreements which were previously exempted under this statutory exemption, may still be exempt under one of the block exemptions issued by the Commissioner, and mainly the Restrictive Trade Practices Rules (Block Exemption for Non-Horizontal Agreements which Do Not Contain Certain Price Restrictions), 2013.
It is advisable to review existing agreements to make sure they adhere to the changes in the antitrust legislation.