A few days ago, the Israeli Antitrust Authority published a
draft statement presenting its position with regard to the
circumstances under which a supplier will be able to dictate the
resale price of its products to its distributor for the next link
in the supply chain (Resale Price Maintenance arrangements –
RPM), without such an arrangement being considered an illegal
The draft statement comes in the wake of the precedent set about
a year and a half ago by the Israeli Supreme Court in the Shufersal
judgment (AR 5823/14).
Until the judgment was handed down, RPM arrangements in Israel
had been trapped within the scope of the peremptory presumption of
being restrictive arrangements. This meant that many vertical
arrangements (i.e. arrangements between non-competitors such as
supplier-distributor), including RPMs, deemed unlawful restrictive
arrangements – even if they did not pose any substantive harm
to the competition – unless the arrangements had been
permitted through one of the mechanisms prescribed in the Israeli
Restrictive Trade Practices Law.
According to the Shufersal judgment, RPMs will be examined
according to the extent of their probable impact on competition. In
other words, vertical arrangements having no potential restraining
or curbing effect on competition will no longer be classified as
restrictive arrangements, even if such arrangements concern matters
included in the law's peremptory presumptions.
The purpose of the Antitrust Authority's recent statement is
to clarify how it will be examining RPM arrangements and to make it
clear that it will be examining RPM arrangements more meticulously
than other vertical pricing arrangements.
The draft statement outlines the "rules of thumb" to
be applied when examining whether RPM arrangements could
potentially harm competition. According to the statement, an RPM
arrangement will not be deemed a restrictive arrangement if the
arrangement does not raise concerns of a probable adverse impact on
competition in the specific market relevant to the parties, and
furthermore, that the RPM serves a clear purpose of boosting
competition. It is important to note that the Antitrust
Authority's statement differentiates between an RPM arrangement
between a supplier and a retail distributor, and an RPM arrangement
between a supplier and a wholesale distributor.
In its statement, the Antitrust Authority is advising parties to
engage in retail segment RPM arrangements only if the following two
conditions exist: (1) the RPM is not in a market characterized by
scant competition or is not in a market plagued by a concern of
collusion between the players in the market; (2) the RPM is needed
in order to promote inter-brand competition and in a way that is
beneficial to consumers. Insofar as the market characteristics
indicate scant competition, an RPM arrangement will have to
irrefutably justify that it is directly and concretely geared
towards improving competition. As for arrangements not relating to
the retail segment, their classification as restrictive
arrangements will depend upon the nature of the relations between
the supplier and the distributor.
The draft statements, coupled with the Shufersal judgment,
herald important news for the Israel trade market, since they
clarify matters considerably for both suppliers and
Barnea & Co. provides advisory services to Israeli and
foreign companies, inter alia, in relation to antitrust
legislation, including RPMs, and, to the extent necessary,
represents clients before the Israeli Antitrust Commissioner. You
are invited to contact us to receive legal counseling in this
regard, and in relation to any other matters.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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On 20 September 2012 the Competition Tribunal (Tribunal) approved the takeover by ABSA Bank (ABSA) of Edcon Group's credit and financial services business on condition that the parties establish safeguards against sharing information with Woolworths Financial Services.
Dominant firms are prohibited by the Competition Act 1998 from charging excessive prices to the detriment of consumers. Why only dominant firms? The presumption is that a small firm will lose its customers to its competitors if it charges excessive prices.
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