Legislation and jurisdiction
Development of antitrust litigation
How would you summarise the development of private antitrust litigation in your jurisdiction?
In recent years there has been a constant increase in private antitrust litigation, especially in the form of class actions. This increase is particularly apparent with respect to class actions concerning international cartels and excessive pricing.
Are private antitrust actions mandated by statute? If not, on what basis are they possible? Is standing to bring a claim limited to those directly affected or may indirect purchasers bring claims?
Private antitrust actions deriving from the provisions of the Restrictive Trade Practices Law, 5748-1988 (the Antitrust Law or the Law), may be filed as class actions, under the Class Actions Law, 5766-2006 (the Class Actions Law), in the framework of contractual suits or as certain tort claims, as well as under several other pieces of legislation (see question 3).
The Antitrust Law is silent with regards to the ability of indirect purchasers to bring private lawsuits alleging antitrust violations. Thus far, the Supreme Court has not had to make a decision on this matter, and there is no precedent that affirms or denies the applicability of the indirect purchaser doctrine under Israeli law.
However, in recent cases where litigants have attempted to rely upon this doctrine, the courts have generally held that indirect purchasers are not precluded from bringing tort claims, such as private antitrust suits, under Israeli law. In Naor v Tnuva, a class action against Israel’s largest dairy producer, which was certified as a class action in April 2016, Tnuva argued that the indirect purchaser doctrine barred the group from bringing a claim against Tnuva and referenced US federal case law in order to substantiate this argument. The Central District Court ruled that, under Israeli law, indirect purchasers are permitted to bring tort claims and that, specifically with respect to the antitrust context, this view is supported by a textual and purposive interpretation of the Antitrust Law and its explanatory notes. In the class action Weinstein v Dead Sea Factories Ltd, the Central District Court, when approving a settlement between the parties, acknowledged the right of indirect purchasers to bring lawsuits against antitrust infringers.
This view is also supported by an amicus curiae brief submitted by the Attorney General of Israel in Hatzlacha v El Al Airways et al, a class action against four major commercial airlines. The Attorney General stated, that at least with regard to price-fixing violations - the offence under discussion in that case - a cause of action for indirect purchasers should be recognised. A decision on the case is still pending.
If based on statute, what is the relevant legislation and which are the relevant courts and tribunals?
Section 50(a) of the Antitrust Law provides that an act or omission contrary to the provisions of the Law shall constitute a tort in accordance with the Tort Ordinance [New Version]. The same applies to any breach of a directive issued by the Commissioner of the Israel Antitrust Authority (the IAA) and conditions imposed by the Commissioner as part of an approval for a merger or restrictive arrangement. Such violations can serve as the basis for claims for damages, or other injunctive relief, by private parties.
The Class Actions Law provides that a person, public entity or consumers’ organisation may, under certain conditions, file a class action on behalf of a class of plaintiffs and seek damages for a breach of the Antitrust Law.
Private antitrust claims are commonly made in the context of contract litigation. A party that seeks to defend itself against the enforcement of a contract will often argue that the contract violates the Law (under section 30 of the Contracts (General Part) Law, 5733-1973, illegal contracts are generally not enforceable). Israeli courts are reluctant to brand contracts, that lack obvious anticompetitive characteristics, as illegal. However, if a court arrives at the conclusion that a provision in a contract violates the Law, such provision will, in general, be unenforceable.
While less common, private claims alleging unfair competition by competitors may also rely, in certain circumstances, on the Unjust Enrichment Law, 5739-1979. Under such claims, the plaintiff may be entitled to receive profits unjustly obtained by the defendant, by means of anticompetitive behaviour, without having to prove actual damages. Such reliance was permitted in Unipharm v Sanofi, which is currently under appeal before the Supreme Court. Claims based on the Unjust Enrichment Law may be especially important in cases where the plaintiff lacks the ability to substantiate the damages caused. An opposing view was subsequently applied by the District Court of Tel Aviv, in the case of Unipharm Ltd v GlaxoSmithKline plc (8 June 2018). Both judgments are currently under appeal before the Supreme Court.
As with other civil claims, private antitrust actions are deliberated before civil courts.
The Antitrust Tribunal acts as an appeals court over decisions of the Commissioner. Additionally, the tribunal serves as a forum of first-instance with respect to applications for the approval of restrictive arrangements. The tribunal does not have jurisdiction over private antitrust claims.
Private parties may also agree to turn to alternative dispute resolution mechanisms such as arbitration and mediation (see question 37).
In what types of antitrust matters are private actions available? Is a finding of infringement by a competition authority required to initiate a private antitrust action in your jurisdiction? What is the effect of a finding of infringement by a competition authority on national courts?
As mentioned above, private actions are available where the defendant has engaged in conduct that is in violation of the Antitrust Law. Such violations may include the defendant’s engagement in a restrictive arrangement that is not permitted under a statutory or block exemption or that has not been properly approved or exempted (this includes horizontal restrictive arrangements such as cartel offences - ie, price-fixing, bid-rigging, market allocation, etc and certain vertical restrictive arrangements). Monopoly violations such as refusal to deal and abuse of dominant position (eg, unfair pricing, price discrimination, tying, predatory pricing, etc), as well as violations of monopoly directives or other conditions imposed by the Commissioner (eg, merger conditions) and the breach of merger control provisions are also actionable violations.
A finding of infringement by the IAA is not required to initiate a private antitrust action. However, a ‘declaration of breach’ made by the Commissioner pursuant to section 43 of the Antitrust Law shall serve as prima facie evidence for the occurrence of whatever was determined in the declaration of breach, in any legal proceeding, thus facilitating private actions. In practice, declarations are indeed usually followed up by private enforcement, in particular class actions. Declarations of breach include a declaration that a certain arrangement constitutes an illegal restrictive arrangement; a merger was unlawfully consummated; a course of action determined or recommended by a trade association constitutes a restrictive arrangement; as well as a declaration that a monopoly has abused its dominant position. The Commissioner may also issue a ‘monopoly proclamation’ stating that a certain firm is a monopoly, which also serves as prima facie evidence for establishing the existence of such monopoly position in any legal proceeding.
What nexus with the jurisdiction is required to found a private action? To what extent can the parties influence in which jurisdiction a claim will be heard?
As regards subject-matter jurisdiction, the general rule is that private claims for sums of less than 2.5 million shekels are deliberated in magistrates’ courts and claims above that amount are deliberated in district courts. . Parties cannot contract out of such jurisdictional rules. Most antitrust-related tort claims, are for sums in excess of 2.5 million shekels, and as such are usually deliberated in district courts.
As regards territorial jurisdiction in antitrust-related matters, the plaintiff is entitled to submit its claim to a court located in the jurisdiction where the defendant resides or conducts its business, where the obligation was created or intended to be fulfilled or where the illegitimate act was committed. If there are several defendants, the plaintiff is entitled to submit its claim to any court in which the claim could be submitted against one of the defendants. Parties can agree to deviate from these rules.
Courts are authorised to assume jurisdiction with regards to a foreign defendant only after a statement of claim has been duly served to such defendant. If the defendant is found within Israeli jurisdiction (eg, is registered or operates directly in Israel or has a local office, branch or representative in Israel), the statement of claim may be served directly to the defendant or its representative. However, if the defendant is not found within Israel’s jurisdiction, the plaintiff is required to seek the court’s approval to serve the claim outside of Israel’s borders. The court is authorised to approve such request if at least one of the conditions detailed in section 500 of the Civil Procedure Regulations, 5774-1984, is met (eg, the claim is based upon an act or omission committed in Israel). In this respect, the Supreme Court ruled that the ‘effects doctrine’ (which sets out the conditions for applying the Antitrust Law to a foreign conduct - see question 6) pertains to the applicability of Israeli substantive antitrust law to foreign conduct; that is, it is a matter of choice of law. The effects doctrine does not regulate service issues and cannot serve as a sufficient basis for obtaining permission to serve a statement of claim outside of Israel’s borders (Hatzlacha v AU Optronic Corporation).
Once the court has assumed jurisdiction, the defendant will be entitled to argue that the courts of the state of Israel are not the ‘natural forum’ for trying the claim (forum non conveniens).
Can private actions be brought against both corporations and individuals, including those from other jurisdictions?
Private actions can be brought against both corporations and individuals, including those from other jurisdictions, provided that the subject matter and personal jurisdiction are appropriate.
As regards subject-matter jurisdiction, the Antitrust Law does not include an express provision that applies its provisions to legal relations outside of Israel. The issue of its application to arrangements concluded between foreign entities outside of Israel has yet to be decided by the Supreme Court. Lower courts have rendered somewhat inconsistent decisions, with a tendency in recent years to adopt the effects doctrine as the prevailing test for the extraterritorial application of the Antitrust Law (see, for example, ACUM Ltd v The Antitrust Commissioner and the Antitrust Commissioner’s determination regarding the alleged Gas Insulated Switchgear cartel). The effects doctrine requires, inter alia, that the conduct in question has had a direct impact on competition in Israel, and an insignificant impact on competition is not sufficient.
Private action procedure
May litigation be funded by third parties? Are contingency fees available?
Third parties may fund private antitrust litigation.
Generally in civil proceedings, contingency fees are available, as well as other fee structures, such as a fixed amount or an hourly rate. In class actions, at the end of the proceeding, the court determines the compensation that is to be paid to the plaintiff, as well as the attorneys’ fee payable in connection therewith.
If certain conditions are met, certification requests and class actions may also be funded by a public fund (the Class Actions Fund) established under the Class Actions Law and funded by the state. The Class Actions Fund is authorised to fund certification requests and class actions in which there is a public or social interest. The IAA has a representative in the Class Actions Fund. In 2017, 46 requests for funding were accepted, three of which were antitrust related class actions.
Additionally, the IAA may offer professional guidance to plaintiffs in antitrust related class actions.
Are jury trials available?
What pretrial discovery procedures are available?
The underlying principle in pretrial discovery is to allow the most extensive discovery possible of the information relevant to the dispute in order to aid in uncovering the truth. At the request of a litigant, the court may order that the parties to a dispute disclose in an affidavit the documents relevant to the dispute that are or were in their possession, including the existence of documents that are protected by privilege. At a litigant’s request, documents in the opposing party’s possession must then be made available for inspection and copying (and any party can request additional relevant documents not mentioned in such affidavit). While this process may require litigants to petition the court, litigants usually deliver the relevant disclosed documents to one another without a court order.
The definition of ‘documents’ is interpreted widely and includes all relevant information and data, including in electronic format (as well as all relevant data utilised in the parties’ experts’ opinions). Courts are also careful not to allow parties to embark on ‘fishing expeditions’.
Third-party discovery is available on a very narrow basis and derives from jurisprudential precedents, not legislation. A party may petition the court to instruct a corporation that is not party to the proceedings to comply with a discovery request if the corporation belongs to, or is under the full control of, the opposing party.
Third-party discovery regarding an entity that is not party to the dispute is very limited. Protecting third parties’ right to privacy for their personal information, the Supreme Court has ruled that such discovery will be required only in rare and exceptional cases, and will require a high degree of persuasion regarding the necessity and essentiality of the requested information, among other stringent conditions. However, information relevant to a dispute, which is in the possession of an administrative agency, can be obtained through the Freedom of Information Law, 5758-1998, in addition to making a request for third-party discovery.
Litigants may submit questionnaires to an opposing party. The questionnaire and the responses to it are not part of the court pleadings. They are not part of the evidentiary materials upon which findings may be based unless they are formally submitted as such to the court. The party that requested to have the questionnaire completed is granted the discretion to decide if and to what extent to use the responses to the questionnaire and submit them as evidence before the court.
Pretrial discovery procedures in class actions are more limited than those in standard civil proceedings. Under the Class Actions Regulations, 5770-2010, the court is authorised to grant discovery only if the documents , which are the subject of the discovery, are related to issues relevant to the certification request (as opposed to being relevant to issues concerning the claim itself) and the claimant has presented prima facie evidence establishing that the requirements for the certification of a class action are met. These rules have been further elaborated by Supreme Court rulings (see Tnuva v Prof. Yaron Zelekha, Boaz Yifat et al v Delek Motors et al and Israel Consumer Counsel v Tnuva). With respect to class actions for excessive pricing, information relating to profitability (eg, costs figures, revenue, etc) may be subject to disclosure, especially if relied upon by the defendant (Tnuva v Prof Yaron Zelekha, Israel Consumer Counsel v Tnuva and recently Osem Investments Ltd v Soroker).
What evidence is admissible?
Generally, the following evidence is not admissible in civil proceedings: hearsay; evidence in regard to which a minister has issued a certificate of confidentiality (eg, when there is a public interest in the confidentiality of certain information); evidence that was obtained through a violation of privacy, as defined in the Protection of Privacy Law, 5741-1981; and statements recorded through illegal wiretapping, as defined in the Wiretapping Law, 5739-1979.
Witnesses are permitted to testify only on facts, as opposed to theories and conclusions. A notable exception to that rule is expert testimony, which may include the presentation of theories and conclusions with respect to the expert’s field of expertise. Naturally, in private antitrust claims, opposing parties usually retain economic experts to prove competitive harm and quantify damages.
In general, litigants are entitled to deviate from evidence law by mutual agreement, and as such, to submit evidence that would otherwise not be admissible. Furthermore, if a party to a civil proceeding does not object to the submission of inadmissible evidence immediately following its submission, such party is precluded from claiming otherwise later and such evidence will be regarded as admissible.
Legal privilege protection
What evidence is protected by legal privilege?
There are two central legal privileges relevant to private antitrust claims: the attorney-client privilege and the legal documents privilege. Additionally, trade secrets are often protected under confidentiality granted by the court.
Under attorney-client privilege, an attorney (including in-house counsel) is barred from disclosing information provided to him or her by his or her client (or by a person on the client’s behalf), if the information is substantially linked to the professional services provided by the attorney. The same prohibition applies to the attorneys’ employees. According to case law, the client is also entitled to enjoy attorney-client privilege, in the sense that the client will not be forced to disclose information concerning professional consultation with his or her lawyer. Attorney-client privilege is absolute, and as such the courts are not entitled to rescind it. The legal sources for attorney-client privilege are section 48 of the Evidence Ordinance [New Version], 5731-1971, as well as section 90 of the Bar Association Law, 5721-1961. Attorney-client privilege does not extend to communications provided in relation to the commission of future, or ongoing crimes or fraud, nor to communications which involved a third party.
The legal documents privilege provides that documents prepared either by an attorney, his or her client or someone on their behalf in connection with pending or anticipated legal proceedings are privileged. The normative source for this privilege is a Supreme Court ruling. The legal documents privilege also applies to documents created in the framework of pending or anticipated alternative dispute resolution proceedings (eg, mediation, arbitration). However, only documents prepared predominantly in order to serve such potential legal proceedings may enjoy such privilege.
A party to a civil proceeding is entitled to file su petition to the court for non-disclosure of evidence constituting trade secrets, pursuant to section 23(c) of the Commercial Torts Law, 5759-1999. The court will accept such petition if the interest in the non-disclosure of the evidence is greater than the need to disclose it, and if other measures cannot be taken to protect the trade secrets (eg, partial discovery, discovery only to outside counsel or economic expert, etc).
Are private actions available where there has been a criminal conviction in respect of the same matter?
Follow-on litigation may arise when an investigation ends with a criminal conviction and sentencing. Civil claims can be submitted to the same judicial panel that convicted the defendant within 90 days of the date on which the verdict became final (section 77 of the Courts Law [Combined Version], 5744-1984; section 17 of Civil Procedure Regulations, 5774-1984).
Utilising of criminal evidence
Can the evidence or findings in criminal proceedings be relied on by plaintiffs in parallel private actions? Are leniency applicants protected from follow-on litigation? Do the competition authorities routinely disclose documents obtained in their investigations to private claimants?
Generally, evidence or findings in criminal proceedings are admissible as prima facie evidence in private actions, subject to the following conditions:
- the evidence and the findings are part of a convicting judgment and provided the basis for conviction (ie, were not made obiter dictum);
- the judgment to convict is final (either the time frame for submitting an appeal has expired or the appeal proceedings have been exhausted); and
- at the very least, one of the parties to the civil proceeding is the convicted person, its substitute (ie, a person who legally assumes the convicted person’s place such as the buyer of a convicted company) or a person whose responsibility arises out of the responsibility of the convicted person (eg, an insurance company, an employer, etc).
An opposing party may be permitted to assume the burden of proof and refute such prima facie evidence and findings, subject to its receipt of the court’s approval for such rebuttal, and together with other stringent criteria concerning such rebuttal.
It should be noted that, notwithstanding the above, evidence and findings introduced in sentencing proceedings are not admissible in court and thus cannot be relied on by plaintiffs in parallel private actions.
The leniency programme applies only to criminal liability regarding certain violations of the Antitrust Law. Therefore for leniency are not protected from follow-on private litigation or from administrative enforcement measures. The first (and only) case in which the leniency programme was used in Israel was in the GIS cartel case. In this case, one of the parties to the alleged cartel (ABB) provided the IAA with evidence in exchange for leniency. In 2013, the IAA issued a declaration of breach (an administrative measure) according to which the parties to the arrangement in question (including ABB) were parties to an illegal restrictive arrangement. Following the determination, several class actions and a civil claim were brought against the alleged cartel members, including ABB.
The IAA does not normally disclose documents obtained in its investigations under its own initiative. A private claimant can file a petition to the IAA for the review of such documents pursuant to the Freedom of Information Law. While the Freedom of Information Law does not apply to materials obtained in the course of investigations conducted by the IAA, the IAA applies similar principles when reviewing petitions for disclosure with respect to such materials. Additionally, if the documents were submitted to the court either in criminal or administrative proceedings, a private plaintiff can also file a petition to review the court’s case file. Generally, under both disclosure alternatives, third parties that the documents refer to will be given the opportunity to object to the disclosure of the documents. A common ground for objection is that the documents refer to sensitive commercial information such as trade secrets.
Stay of proceedings
In which circumstances can a defendant petition the court for a stay of proceedings in a private antitrust action?
A stay of proceedings in private antitrust actions may be granted on the same grounds as in any other civil proceeding. Defendants commonly petition the court for a stay of the proceedings when an action dealing with substantially the same cause of action is pending elsewhere, whether such parallel action is administrative or criminal in nature (the lis alibi pendens principle). When weighing such a petition, the court takes into account a number of factors including potential cost and time savings to the state and to the parties, the prevention of contradictory court decisions and the balance of convenience between the parties.
Plaintiffs are also permitted to petition the courts for a stay of proceedings. This is commonly done when criminal or administrative enforcement proceedings are pending and the findings in such proceedings may support the plaintiff’s claim.
Standard of proof
What is the applicable standard of proof for claimants? Is passing on a matter for the claimant or defendant to prove? What is the applicable standard of proof?
Generally, the burden of proof in civil cases lies with the plaintiff who is required to prove his or her claim on the balance of probabilities. The IAA Commissioner can publish a declaration of breach, which provides the plaintiff with prima facie evidence that the Antitrust Law was breached by the defendant. Additionally, cartels, bid-rigging arrangements and certain other forms of horizontal arrangements are held to be inherently harmful to competition and thus, in regards to which, the plaintiff does not need to prove their actual anticompetitive effect to establish liability. However, this principle appears to be distinguished with respect to the case of international cartels, in regard to which one must prove that the requirements of the effects doctrine are met, as a precondition for the application of the Antitrust Law.
What is the typical timetable for collective and single party proceedings? Is it possible to accelerate proceedings?
The timetable for private proceedings varies significantly between cases, primarily depending on the scope of the case, the strength of the claim and the willingness of the parties to settle. As with other private claims, an antitrust related claim can be dismissed in limine or it may be litigated over a period of several years. Parties can file a petition to expedite specific court proceedings (eg, court hearings).
What are the relevant limitation periods?
Civil causes of action generally expire within seven years from the day that the cause of action arose (sections 5 and 6 of the Prescription Law, 5718-1958). In civil antitrust claims, the cause of action arises on the day on which the damage occurred; in the case of an ongoing infringement, the cause of action may arise on the day on which the infringement ceased (section 89 of the Tort Ordinance). However, if the facts constituting the cause of action were unknown to the plaintiff for reasons out of the plaintiff’s control, and which the plaintiff could not have prevented with reasonable care, the period of limitation begins on the day on which the facts became known to the plaintiff (section 8 of the Prescription Law). According to applicable case law, the degree of knowledge required to trigger the commencement of the limitation period is a suspicion regarding the facts that constitute the cause of action (including cases in which the plaintiff should have had such suspicions).
If damage caused by the defendant is not discovered on the day of its occurrence, grounds for a civil tort claim shall expire at the end of 10 years from the day on which the damage occurred (section 89(2) of the Tort Ordinance; Merom Golan Kibbutz Cooperative Society of Agriculture settlements Ltd v Yoram Fradkin). This rule, however, does not apply in cases where other elements of the offence were discovered after the time in which the damage occurred. For example, if a plaintiff discovers that it was harmed at the time at which the damage occurred, but only learns at a later date that this harm was due to the operations of a cartel, the prescription period will not be limited to such 10-year period.
In addition, there are a few specific limitation rules governing prescription that apply only to class actions. For example, if the court certifies a class action, the relevant group members will be deemed, for the purposes of prescription, as if they had submitted a claim on the day on which the request for approval of the class action was submitted. If the court rejects a request for the certification of a class action or dismisses such request, the personal claims of the relevant group members will generally be prescribed until the expiration of a period of one year as of the day upon which the court’s decision became final, thereby extending the limitation period as necessary.
What appeals are available? Is appeal available on the facts or on the law?
In civil proceedings, a trial court’s judgment is subject to a right of appeal to a higher tribunal. A second appeal requires leave from the court. Interim decisions are subject to appeal where leave is given. Some interim decisions, most of which deal with technical matters (eg, decisions regarding deadlines), are not subject to appeal during the trial court proceeding.
Administrative decisions of the Antitrust Commissioner (eg, a determination according to which a party committed a violation of antitrust law) are subject to a right of appeal to the Antitrust Tribunal. Judgments of the Antitrust Tribunal are subject to a right of appeal to the Supreme Court. Interim decisions of the Antitrust Tribunal, by contrast, are not subject to appeal for the duration of the proceedings before the Antitrust Tribunal.
Appeals may be based on both legal and factual grounds. However, the appellate court will rarely intervene in the factual determinations made by the trial court and is much more likely to intervene in matters of law.
Are collective proceedings available in respect of antitrust claims?
Class actions may be only be filed regarding matters listed in the Class Actions Law or where other legislation explicitly grants a right to file a class action. As described in question 3, collective proceedings in respect of antitrust claims under the Antitrust Law are available under the Class Actions Law.
Are collective proceedings mandated by legislation?
No. Parties may elect whether to file a claim as a private civil suit or as a class action (provided that there is a right to file a class action in the relevant matter). Once a class action has been certified, all parties that belong to the class, as it was defined by the court, are automatically included in the action unless they affirmatively opt out of the class within the allotted time frame.
If collective proceedings are allowed, is there a certification process? What is the test?
Under section 8 of the Class Actions Law, a court is authorised to certify a class action if the following cumulative requirements are satisfied: the action must raise substantive questions of law or fact that are common to all members of the group and there is a reasonable possibility that the answer to these questions will be found in favour of the group; a class action is the most efficient and equitable method to resolve the dispute under the circumstances of the case; and it must be reasonable to presume that the interests of all members of the group will be represented and managed in an appropriate manner and in good faith.
Plaintiffs are required to demonstrate that the above conditions are satisfied based on prima facie arguments and evidence in support of their claim.
Have courts certified collective proceedings in antitrust matters?
In recent years, there has been an increase in the number of antitrust-related class actions. In particular, class actions based on excessive pricing claims against monopolies have become increasingly common since the social justice protests in summer 2011, and the public opinion published by the previous Commissioner in 2014, which stated that excessive pricing may be viewed as a breach of the Antitrust Law. There has also been an increase in class actions against alleged international cartels. Many of the antitrust-related class actions do not reach the certification stage as they are withdrawn (usually with a reward granted in exchange for the withdrawal) prior to certification, or settlements are reached between the parties.
In 2016, the Central District Court certified a class action against Tnuva, in which it was argued that Tnuva charged excessive prices (Naor v Tnuva, see question 2).
Opting in/ out
Can plaintiffs opt out or opt in?
Generally speaking, once a class action has been certified by the court, plaintiffs may opt out from the class by informing the court of their desire to do so, within 45 days of the class action’s certification being publicised, or within a longer time frame if so determined by the court.
Do collective settlements require judicial authorisation?
Once a class action has been filed or certified by the court, settlement of the claim requires judicial authorisation. If a proposed settlement is not dismissed in limine by the court, the court will order that the submission of the settlement be made public, and that the class members, the Attorney General, as well as relevant regulators (eg, the Antitrust Commissioner, the Consumer Protection Commissioner, the Supervisor of Banks, etc) be sent copies of the proposed settlement. Certain parties, such as any member of the represented class, a government agency related to the subject matter of the settlement or class action and the Attorney General, may file a reasoned objection to the proposed settlement.
A member of the class action class who is not interested in being party to the proposed settlement may request to be removed from the class that the settlement shall apply to.
The court is authorised to approve a settlement only if it finds that the settlement is appropriate, fair and reasonable. However, if the proposed settlement is submitted prior to the certification of a class action, the court must also analyse certain conditions, prior to giving it’s approval to the settlement, which are essentially the conditions required for certifying a class action. The Class Actions Law also sets forth a number of other requirements and procedures that may be applicable to the approval of a settlement, such as the appointment of an expert on the relevant subject matter to provide an opinion on the proposed settlement.
Legal practice on the matter of class actions has also led to the development of another form of settlement, which involves the withdrawal of class action suits. The Class Actions Law sets out the procedure for the withdrawal of a class action. A class action can only be withdrawn if it has not yet been certified and once a withdrawal is approved, it does not create a res judicata with regard to the members of the class (but rather only with regards to the named plaintiff). In some cases, however, defendants have taken up the practice of granting a reward to the withdrawing plaintiff and their counsels despite the action being withdrawn. This is often done when the action appears to have raised an issue of importance and has led to a beneficial outcome such as a positive change in behaviour, or as a method of hastening the conclusion of unfounded actions and thus evading the associated PR and litigation costs. This practice has been met with scepticism by the courts, which in certain cases have deprived the withdrawing plaintiff and their counsels of any reward. Accordingly, the courts have set certain conditions for the approval of withdrawal requests that involve the provision of some form of reward or benefit in exchange for the withdrawal of the class action certification request. The Supreme Court recently determined, in Markit Efficiency Products Ltd v Sonol Israel Ltd, that a reward for a withdrawing plaintiff and his counsels should be approved by the Court only in exceptional circumstances, subject, inter alia, to the provision of actual benefits for the class arising from the filing of the motion for certification.
National collective proceedings
If the country is divided into multiple jurisdictions, is a national collective proceeding possible? Can private actions be brought simultaneously in respect of the same matter in more than one jurisdiction?
Israel is not divided into multiple jurisdictions. For administrative purposes, Israel is divided into six districts. Private actions dealing with the same matter can be brought simultaneously before multiple courts in different jurisdictions. However, the Supreme Court is authorised to order that such private actions be deliberated upon before the same court.
Has a plaintiffs’ collective-proceeding bar developed?
What forms of compensation are available and on what basis are they allowed?
An antitrust-related cause of action enables the plaintiff to seek compensatory damages, which are limited to the actual loss suffered by the plaintiff. This is often proved via the use of an expert economic opinion.
What other forms of remedy are available? What must a claimant prove to obtain an interim remedy?
The interim remedies and injunctions available in private antitrust actions are the same as those available in other civil actions and are generally aimed at preserving the status quo. A plaintiff who seeks an interim remedy must convince the court of the existence of a prima facie cause of action; that the balance of harm weighs in its direction; that the motion is made in good faith; and that granting the remedy is just and warranted under the relevant circumstances and does not cause harm beyond what is necessary.
In antitrust-related cases, however, the Supreme Court has held that courts should rarely grant motions for interim remedies due to antitrust claims requiring ‘a profound examination’, which should be conducted in the course of the main proceeding. A notable exception to this rule concerns determinations issued by the Commissioner, which state that the defendant breached the Antitrust Law. In such cases, such a determination by the Commissioner will serve as prima facie evidence that the Antitrust Law was breached, and thus civil courts should be more inclined to grant motions for interim remedies.
Are punitive or exemplary damages available?
In civil antitrust cases, damages are limited to compensatory damages and thus punitive or exemplary damages are generally not awarded (though technically possible under general tort law). Recently, the IAA began advocating for an amendment to the Antitrust Law that would allow for treble damages for antitrust offences.
Is there provision for interest on damages awards and from when does it accrue?
Damages will normally include interest and will be linked to the consumer price index according to the Interest and Linkage Adjudication Law, 5721-1961. Damages will start to accrue interest from the day on which the action was submitted, or on another date determined by the court, which may be any date starting from the date upon which the cause of action arose. Interest on repayment of legal expenses, if awarded, will accrue from the date upon which such expenses were incurred, until the later of: the date on which the judgment is rendered, and the payment of the award as determined by the court. Interest on the repayment of attorneys’ fees accrues from the date upon which the judgment is rendered until the date of repayment as determined by the court.
Consideration of fines
Are the fines imposed by competition authorities taken into account when setting damages?
This question has yet to be examined by the courts. The IAA was granted legislative authority to impose ‘fines’ (monetary payments) only in 2012. As a matter of legal rationale, fines imposed by the IAA (or foreign competition authorities) should normally not be taken into account when setting damages. Fines, which go to the national treasury, do not mitigate the actual damages suffered by the plaintiff and their purpose (punitive) is different from the purpose of civil damages (compensation). The level of fines is primarily impacted by the violator’s turnover, which should not impact civil compensation. However, the level of fine may have some relevance to the civil court proceedings, in cases where harm to competition served as an aggravating circumstance in the calculation of the fine, as such harm is often associated with harm to the public.
Who bears the legal costs? Can legal costs be recovered, and if so, on what basis?
At the discretion of the court, legal costs are often imposed on the losing party. The amount of the awarded costs is dependent, inter alia, upon the actual legal costs (eg, court fees, witnesses’ salary, costs relating to the registration of a court protocol, etc), attorneys’ fees, the value of the claimed remedy or relief, the value of the awarded remedy, the complexity of the case in question and the manner in which the parties handled themselves during the proceedings.
Joint and several liability
Is liability imposed on a joint and several basis?
In antitrust-related cases, liability is mostly imposed on a joint and several basis. However, courts are authorised to distribute liability among the defendants. In Tower Air v Aviation Services Ltd, the plaintiffs argued that the coordinated activity of the defendants, in the framework of a jointly owned company, constituted an illegal restrictive arrangement. The plaintiffs also argued that the said jointly owned company abused its monopoly position in the market. The court ruled in favour of the plaintiffs and determined that the defendants were equally responsible towards the plaintiffs. Nonetheless, the court divided the liability among the defendants according to their shares in the jointly owned company.
Contribution and indemnity
Is there a possibility for contribution and indemnity among defendants? How must such claims be asserted?
Indemnity agreements and insurance policies among infringing parties are invalid with regard to monetary payment proceedings undertaken by the IAA (an administrative enforcement measure) and criminal antitrust proceedings. However, as with civil proceedings in general, insurance policies and indemnity between defendants in civil antitrust matters are permitted subject to certain prohibitions and limitations. Claims for contribution and/or indemnity may be asserted in the framework of the principal proceeding or in a separate claim.
Is the ‘passing on’ defence allowed?
Only a limited number of cases have addressed this subject. Thus far, courts have yet to positively rule whether the passing on defence is a valid defence argument in civil antitrust cases. In Isracard Ltd v Reis, the Supreme Court implicitly acknowledged the passing on defence in the context of a claim alleging that a monopoly charged excessive prices.
Some courts have recognised the right of indirect purchasers to bring antitrust lawsuits, which logically should lead these courts to acknowledge the passing on defence - to avoid double compensation (eg, Hatzlacha The Consumers’ Movement for the Promotion of a Fair Society and Economy v AU Optronic Corporation and Naor v Tnuva, Weinstein v Dead Sea Factories (see question 2)).
Do any other defences exist that permit companies or individuals to defend themselves against competition law liability?
Any defence claim that can be brought in civil proceedings is also valid in the context of civil antitrust proceedings. This is in addition to substantive antitrust defence arguments (such as the applicability of a block exemption, statutory exemption, etc).
Alternative dispute resolution
Is alternative dispute resolution available?
Antitrust claims, particularly in the context of contract disputes, may be brought not only before a court, but also in the course of arbitration, which is becoming increasingly common in Israel. The Arbitration Law, 5728-1968, provides contracting parties with broad discretion in agreeing on the substantive law and procedural rules that shall apply to arbitration proceedings. The Arbitration Law, however, may not be used as a mechanism for enforcing illegal contracts such as those that are in violation of antitrust law. Nonetheless, in an attempt to encourage the use of arbitration as a dispute resolution mechanism, courts have not categorically disqualified arbitrations in which one party argued that the disputed agreement was, in whole or in part, an illegal restrictive arrangement.
In one case, the Supreme Court validated an arbitration clause, even though the agreement in which it was included was argued to be a restrictive arrangement. The members of the panel expressed different opinions as to whether the agreement indeed violated the Antitrust Law; this question remained unanswered. In another case, the court rejected a claim of invalidity regarding an arbitration agreement, owing to the fact that it was signed after the contractual relations between the parties, which were claimed to constitute a restrictive arrangement, had terminated.
As with other civil disputes, antitrust claims may be resolved within the framework of mediation, subject to the parties’ consent, prior to commencing formal litigation proceedings. In many cases, including class actions, the courts instruct the parties to attempt to resolve their dispute before a mediator (who may be formally appointed by the court), while the formal litigation proceedings are remain suspended.
UPDATES & TRENDS
Updates & Trends
Updates and trends
The Israeli Minister of Justice recently initiated a comprehensive reform to the Civil Procedure Regulations, which govern many procedural aspects of civil litigation in Israel. The revised Regulations will enter into force next year. From the private antitrust litigation point of view, one of most substantial changes made under such reform concerns the service of process upon foreign defendants residing outside the borders of Israel. While the mere occurrence of harm in Israel, according to the current Regulations, is not enough to establish a right to serve process abroad upon a foreign defendant (typically, the act or omission causing such harm would have been required to have occurred in Israel), the aforementioned reform will permit such service to take place even if only the harm took place in Israel. This revision is expected to further increase the involvement of foreign entities in local litigation, including antitrust-related litigation.