January 23, 2019
The Competition Authority Director General and Huliot Agree on a Consent Decree in which Huliot Admits Abuse of its Monopoly Position
As Part of the Consent Decree, Huliot Will Pay NIS 2.5 Million and the Company Deputy CEO Will Pay NIS 95,000
The Competition Authority published for public comment an agreement it reached with Huliot (Agricultural Cooperation Association) Ltd. (hereafter – Huliot).
Huliot manufactures, among other things, piping products for home sewage removal. Huliot specializes in the production and marketing of residential piping products, including silent sewage pipes made out of polypropylene. Huliot's customers are building material retailers that sell a range of Huliot's products and other building products to construction contractors and private customers. In 2016, Golan Plastic Products Ltd. (hereafter – Golan) began operating in the silent polypropylene sewage pipes segment.
After one of the major retailers buying from Huliot began purchasing silent polypropylene sewage pipes from Golan, Huliot stopped selling its products to that customer. Huliot also discontinued the discounts received by another important retailer that began buying these products from Golan. The Competition Authority Director General was concerned that this conduct had been designed to deliver a message to retailers to refrain from purchasing Golan's competing products, and was therefore liable to make it difficult for Golan to enter and gain a foothold in the market. The Competition Authority thereupon began an investigation of the event.
Under the consent decree, Huliot and its Deputy CEO admit that soon after Golan (Huliot's competitor) entered the market in February 2016, Huliot and its Deputy CEO abused Huliot's monopoly position in contravention of Section 29A of the Economic Competition Law 1988 (hereafter – the Law).
In addition to the admission by Huliot and its manager that Huliot had abused its monopoly position, Huliot also undertook to pay the State Treasury NIS 2.5 million, and the company Deputy CEO undertook to pay NIS 95,000.
The consent decree is now being published for public comments. Subject to weighing these comments, the decree will be submitted to the Competition Tribunal for approval.
It will be noted that as part of the Competition Authority's investigation of the allegations that Huliot abused its monopolistic position, a criminal investigation was opened against Huliot for failing to respond to a request for information sent to Huliot by the Competition Authority, which constitutes an offense under Section 46(B) of the Law. This investigation culminated with the conviction of Huliot and its CEO (as part of a plea bargain). In the framework of the plea bargain, it was agreed that the parties would ask the Court to sentence Huliot's CEO to two weeks of community service, a NIS 50,000 fine, and a suspended prison term. The Court was asked to fine Huliot NIS 150,000. No verdict has yet been rendered in the case.