Israel: Watchdog publishes draft guidance paper on significant market power

Following the amendment to the Economic Competition Law, the Israeli Competition Authority, on February 3, 2019, published for a public hearing a draft guidance paper on how to determine the existence of significant market power.

On January 10, 2019, an amendment to the Economic Competition Law came into force dealing with the definition of a monopoly. According to the previous version of the Law, a corporation was considered a monopolist if it controlled more than half the supply or purchase of a product or service. According to the amendment, a monopolist will now also include anyone who has significant economic market power. In light of this amendment, the need arose to clarify how the Authority believes that the existence of significant market power should be determined.

As the guidance paper explains, significant market power is the power to charge a price that is significantly higher than the price that would be charged in a competitive market. When a company with market power considers whether to raise the prices that it charges the public, it does not have to worry about the expected reaction of customers nor the expected response of other suppliers.

The guidance paper gives a list of characteristics relevant to examining significant market power, including market share, the number and standing of competitors in the same sector, volatility of market share, the degree of differentiation between products in the sector, the importance of the product for retailers, and the existence of barriers to transfer for customers.