This Law for the Promotion of Competition and the Reduction of Concentration, which was published on December 11th 2013, is likely to have significant interest even for businesses which are not directly subject to the provisions of the Law, by virtue of the fact that the Law may well apply to their competitors as well as to suppliers.

This Law was passed in order to reduce economy-wide concentration, and to promote competition in various sectors of the economy.

Although the Concentration Law has received a lot of attention in the press, it seems that the media has missed a number of central features of the Law. Lawyers at HFN have analysed the new Law and came up with some fascinating insights.

Many people are still unaware of the practical implications of the provisions of the Law and the likely influence of the Law on business and commercial activity in a wide array of business sectors.

A review of the Law and the arrangements that it puts in place suggests that in many areas the Law may bring about far-reaching changes.  Many business concerns face a real danger that the commercial activities that they presently conduct will not be allowed to continue.

Think about a company that is active in the field of public transportation. This company may be able to oppose the allocation of a licence to a competitor on the grounds of economy-wide concentration and the promotion of competition in that specific area of activity. Moreover, the provisions of the Law may result in licences that have already been granted not being renewed, for similar reasons. Similar examples can be brought from dozens of areas of activity which are central to the economy.

In light of the wide-ranging effects of the Law on many parties active in the economy, there are likely to be consequences for credit providers: in practice, the Concentration Law adds a new “risk factor” for borrowers who are covered by the Law.  In addition, because of the change of control that will take place in many companies as a result of the provisions of the Law, the “acceleration” provisions in many credit agreements will have to be re-visited.

The Concentration Law has only just been published, and the provisions of the Law have yet to be considered or interpreted by the various regulators concerned, or by the Courts. As a result, we have prepared a note setting out our understanding of the basic principles embodied in the Law.  It is likely that with the passage of time various clarifications and interpretations will be given to various provisions within the Law.

We have simplified the provisions of the Law. This post and the attached note do not replace a full and detailed legal analysis of the effect of the Law in any given circumstance