The Israel Antitrust Authority (‘’IAA’’) has announced its intention to impose a financial sanction in the sum of NIS 25,640,000 on Bitan Wines, due to its violation of the terms of the merger between Bitan Wines and the Mega supermarket chain.

In January 2016, the Mega supermarket chain entered a procedure freezing and, as a result, the majority of its assets were acquired by Bitan Wines. The General Director’s approval for the merger was granted on the condition that Bitan Wines will sell branches in eight different localities where Mega and Bitan Wines have overlapping branches.

Despite the fact that the deadline for fulfilling the merger conditions has passed, Bitan Wines has only fulfilled its obligation in relation to the sale of branches in the vicinity of Herzliya. The branches that it was obligated to sell in all other localities have not yet been sold. Consequently, Bitan Wines violated the terms of the merger.

According to the IAA, the potential negative impact on competition as a result of the actions of Bitan Wines is clear and evident, since the IAA had ordered the sale of branches only in areas where it believed that the merger between Bitan Wines and Mega would undermine regional competition. Therefore, deferring the sale of such branches and leaving them in the hands of Bitan Wines causes an obvious concern that competition is being significantly undermined.

The IAA’s intention to impose a financial sanction of the magnitude of dozens of millions of shekels is further evidence of its strategy of imposing increasingly stricter punishments for violations of the Restrictive Trade Practices Law. One may recall that, not long ago, the court had sentenced senior officers of the Shufersal supermarket chain to actual prison time for their breaches of conditions stipulated by the Antitrust General Director when he approved the merger between Shufersal and Club Market.

This trend of imposing stricter criminal and administrative punishments underscores the importance of prudent conduct and strict compliance with the Antitrust General Director’s decisions.