New Block Exemption for Non-Horizontal Arrangements that Do Not Include Certain Price Restrictions
The IAA promotes its “self-assessment” policy and publishes a new and precedent Block Exemption for most popular vertical arrangements.
By the end of July 2013, the Israeli Antitrust Authority published a new Block Exemption for non-horizontal arrangements that does not include certain price restrictions. The IAA’s declared intention is to decrease the bureaucracy hassle on the business sector and to reduce criminal exposure in cases it is not required.
The new Block exemption exempts from the duty to submit supplier-client arrangements for its approval, and passes the responsibility to the parties themselves and their professional advisors, to check whether there is a significant of competition in the relevant market as a result of the relevant arrangement. If it will turn out that the arrangement does raise significant harm to competition in the market, the IAA shall be able to challenge this arrangement retroactively, as in the US and the European antitrust laws, and it shall be able to use, inter alia, the administrative fines tool.
The new Block Exemption recognizes that in arrangements between non competitors, quite often, the arrangement has a legitimate business justification and it does not harm competition, and sometimes even promotes it. Most of the arrangements between suppliers and their clients are included in the new Block Exemption, except of those in which the supplier dictates a minimum resale price maintenance (for example, in a situation in which the supplier dictates a reseller a minimum resale price to the consumers, that the reseller is not allowed to charge less than it).
The new Block Exemption determines an “Horizontal Arrangement” as a restrictive arrangement that at least two of its parties are competitors, dealing with goods they are competing about, or a restrictive arrangement that is an investment of one competitor in another that does not reach to be a companies’ merger.
“Competitors” are determined as any of the following:
- Those that during the term of the restrictive arrangement or during the three years before had an overlap between any goods one of them supplies and any goods supplied by the other party and both supply those goods to similar or identical purchaser, or that there is an overlap between any goods purchased by one of them and any goods that the other is purchasing and both purchase those goods from similar or identical suppliers (“Overlap” means identity or similarity between the goods supplied or purchased by one to those supplied or purchased by the other, or that it has been used for identical or similar purposes);
- Those that it is reasonable that they will be competitors, as abovementioned, unless the restrictive arrangement;
- Those that the restrictive arrangement is intended to limit them from being competitors, as abovementioned;
For the purposes of this determination, it does not matter whether the competitors are included or not included in the same market according to economic tests of market definition, and the determinations of “Competitor” and “Potential Competitor” in the general instruction and definitions for the Block Exemptions, shall not apply.
“Price Restriction” is determined as a restriction in an arrangement between a supplier of goods and a purchaser of goods that is regarding the price in which certain goods shall be sold by certain purchaser, except a restriction that limits the ability to rise of the price in which goods shall be sold by a purchaser as abovementioned.
According to the new Block Exemption, a restrictive arrangement that is non-horizontal and that does not include certain price restriction, is exempted from the duty to accept the prior approval of the Antitrust Tribunal (or a specific exemption from the Antitrust Commissioner), if the restrictions in it do not limit competition in a significant part of the market influenced by the arrangement, or if they might harm competition in a significant part of a market as abovementioned, but they are not able to significantly harm competition in a market as above-mentioned and that the essence of the restrictive arrangement is not the reduction or the prevention of the competition, and that it does not include restrictions that are not necessary for the implementation of its essence.
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Ziv Abramovich, Lapidot, Melchior, Abramovich & Co., Jerusalem
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