The 16th Amendment to the Antitrust Act Comes Into Force
August 16 , 2015
the 16th amendment of the restrictive trade practices act, 5748-1988 (hereinafter: “the
antitrust law”) revokes the statutory exemption of mutual exclusivity agreements from antitrust supervision which from now on will be subject to the general regime prescribed by the
antitrust law. This change applies also to agreements that are currently in force.
The Amendment
An amendment to the Restrictive Trade Practices Law, 5748-1988 (hereinafter: “the Antitrust Law”),
enacted in November 2014, is coming into force on August 25, 2015. The amendment deals with mutual
exclusivity distribution agreements and other matters. The commencement date of the part of the
amendment that deals with mutual exclusivity agreements was however been recently postponed, under
certain conditions, in view of requests from the public as detailed hereinafter.
Hitherto, mutual exclusivity agreements between a purchaser and a seller (e.g. agreements where both
the local distributor and the foreign supplier commit to exclusivity) were exempted from being regarded
“restrictive” under Subsection 3(6) of the Antitrust Law1. The amendment now cancels this exemption.
The Purpose of the Amendment
According to the Bill, the cancellation of Subsection 3(6) was aimed at equating the legal regime
applicable to all exclusivity agreements whether mutual or not. Accordingly, mutual exclusivity
agreements will be subject to the regime prescribed by the Antitrust Law namely, they will be deemed
unlawful unless obtaining a specific approval from the Antitrust Tribunal, obtaining an exemption from
seeking approval from the Antitrust Commissioner, or unless sheltered under a Block Exemption. With the
coming into effect of this amendment, unless exempted under any of the Block Exemptions pertaining to
one-sided exclusive arrangements, the legality of these arrangements will be determined on the basis of
their probable competitive effect.
The Consequence of the Amendment
The above detailed change, which applies to existing arrangements as well as new ones, might have
significant implications on the operation of many enterprises, which so far used to distribute their products
under mutual exclusivity arrangements, in particular, but not only, those companies where the
manufacturer or distributor holds substantial market share in the area of its operation.
The Antitrust Authority’s Adjustment
On August 6, 2015, answering to public complaints that the time period afforded by the Amendment was
insufficient for evaluating the compliance of existing mutual exclusivity agreements with the amended
Antitrust Law, the Antitrust Commissioner published a notice (available in Hebrew2) according to which the
enforcement of the amendment detailed above on mutual exclusivity agreements will be postponed until
February 25, 2016, provided that the parties to such agreements submit a notice to the Antitrust Authority
(“the Parties Notice”). The Parties Notice should inform the Antitrust Authority of the existence of a mutual
exclusivity agreement, should include an executive summary thereof and the full text of the mutual
exclusivity clause(s). Notwithstanding, it was also noted, that the Commissioner reserves the right to
enforce the Antitrust Law in cases he deems appropriate and justified.
Orit Gonen
Adv., Partner
Eran Bareket
Adv., Senior Partner
Orit Gonen is a partner at
Gilat, Bareket & Co.
David Gilat
Adv., Patent Attorney, Senior Partner
Eran Bareket is a senior
partner at Gilat, Bareket &
Co.
David Gilat , attorney at law
and patent attorney, is a
senior partner at Gilat,
Bareket & Co.
1
This subsection reads:
3. Notwithstanding the provisions of Section 2, the following arrangements shall not be deemed restrictive
arrangements:
…
(6) An arrangement entered into by the purchaser of an asset or service and its supplier, involving restraints, all
of which constitute a commitment of the supplier not to supply certain assets or services for marketing other than
to the purchaser, and a commitment of the purchaser to purchase such assets or services only from the supplier,
provided that both the supplier and the purchaser are not engaged in the production of such assets or the
provision of such services; such an arrangement may apply to the entire area of the country or to a part thereof;
2
And available at the following link: http://www.antitrust.gov.il/subject/103/item/33738.aspx
These newsletters are provided for general information only. It is not intended as legal advice or opinion
and cannot be relied upon as such.