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Israel's Restrictive Trade Practices Law: Antitrust Misadventures in a Small Developing Country

Published online by Cambridge University Press:  12 February 2016

Lionel Kestenbaum
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In 1959, Israel's parliament, the Knesset, enacted a government-proposed Restrictive Trade Practices Law, without a dissenting vote. In urging passage, the Minister of Finance and members of the labour parties comprising the Government had declared that the Law would fulfil an important role in preventing injury to the economy and exploitation of the consumers, taking the place of pervasive governmental controls, and would make a “substantial contribution to competition, efficiency and to the viability of the country's economy”. The principal complaint of legislators outside the labour parties, particularly those associated with the business community, was that the Law did not go far enough in establishing a competitive environment, for “competition is as essential to us as air to breathe”.

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Articles
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Israel Law Review , Volume 8 , Issue 3 , July 1973 , pp. 411 - 465
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Copyright © Cambridge University Press and The Faculty of Law, The Hebrew University of Jerusalem 1973

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References

1 Restrictive Trade Practices Law (1959) 13 L.S.I. 159. Restrictive Trade Practices (Amendment) Law (1961) 15 L.S.I. 27. Restrictive Trade Practices (Amendment No. 2) Law (1963) 17 L.S.I. 169. The official text (in Hebrew) of the Law and amendments are in the official annual statutes, (1958/59) Sefer HaHukim No. 286, p. 152, (1960/61) No. 328, p. 34, (1962/63) No. 404, p. 14, (1971/72) No. 641, p. 18, (1972/73) No. 695, p. 148 (the two most recent have not yet been translated). “Res. Prac. File” refers to the files of applications and proceedings maintained by the Controller of Restrictive Trade Practices, available to the public in the offices of the Ministry of Commerce and Industry in Jerusalem. Published writings in English on Israel's antitrust programme are as follows: Jaffe, , “Cartel Control in Israel” (1967) 12 Antitrust Bulletin 973Google Scholar; Shefer, , “A Critique of the Implementation of the Trade Restraints in Law in Israel” (1971) 16 Antitrust Bulletin 415Google Scholar; Shefer, , “Guidelines for Legislation on Monopolies and Restrictive Practices in Small Economies” (1970) 15 Antitrust Bulletin 781Google Scholar; Kaplan, , “Israeli Antitrust Policy and Practice—A Different Approach towards Antitrust by an Emerging Nation” (1971), 26 Record of N.Y. City Bar Ass'n. 389.Google Scholar Two of these authors have had a significant role in the programme. Dr. Jaffe was Israel's first Controller of Restrictive Trade Practices. Dr. Shefer, an economist and now head of the Price Section in the Ministry of Commerce and Industry, was formerly economic adviser to the Controller. His articles are chapters from an unpublished doctoral dissertation, “Monopoly and Competition in Small Economies with Special Reference to Israel” (February 1970, University of London, hereinafter cited “Shefer dissertation”). For an overall description of antitrust legislation in effect in various countries (including Israel), and the spread of such laws since World War II, see Edwards, Corwin D., Control of Cartels and Monopolies: An International Comparison (Oceana, 1967).Google Scholar

2 The vote on the Law in 1959 was 32–0, with 16 abstentions. (1959) 27 Divrei HaKnesset 2741.

3 (1957) 23 Divrei HaKnesset 319–21, 328, 350, 363, 365, 443 (1957); (1959) 27 Divrei HaKnesset 2732.

4 (1957) 23 Divrei HaKnesset 348; see also at 361, 376–77, 383.

5 State Comptroller, Annual Report No. 18 for 1967 (1968) 338.Google Scholar The Office of the State Comptroller is authorized to examine and review the operations and accounts of Ministries, local authorities, and bodies in which the Government has a management interest (including government corporations). The Comptroller's recommendations are not binding, but the high prestige, integrity and independence of the office gives its reports important influence. The State Comptroller Law, (1958) 12 L.S.I. 107.Google Scholar Recently, the Comptroller was also vested with the authority of Ombudsman. Amendment in (1970/71) Sefer HaHukim, No. 623 at p. 112.

6 U.K. Restrictive Trade Practices Act, 1956, 4 & 5 Eliz. 2, C. 68. For Israeli references to the relation of the Israeli and British statutes, see, e.g., Shimoni v. Ulamei Lehayim, Ltd., (1971) (I) 25 P.D. 824; Osem Food Manufacturing, Ltd. v. Controller of Restrictive Trade Practices, Res. Prac. File No. 25, Decision February 16, 1961, (1961) 25 P.M. 360; see Association of Liquor Manufacturers, Res. Prac. File No. 3, Decision November 9, 1961. The principal pertinent differences from the U.K. statute are (a) the breadth of coverage—the U.K. Law (sec. 6) applies only to agreements regarding goods (not services), and which impose restraints upon two or more parties; in addition, the Israeli definition of “cartel” is broader, the exceptions in some respect narrower; (b) the public interest criteria—the U.K. Law limits consideration to specified “gateways” (sec. 21); (c) the registration obligation— the U.K. Law provides for administrative discretion, in that the Board of Trade can define classes of agreements which are subject to registration (sec. 9) and exempt agreements of no substantial economic significance (sec. 12) and in that the penalty for failure to register is imposed only after notice from the Registrar of Restrictive Trading Agreements requiring registration (secs. 14, 16); (d) validity of pending agreements—the U.K. Law leaves restrictive agreements valid and enforceable until the Restrictive Trade Practices Court finds them contrary to the public interest (sec. 20). See Wilberforce, , Campbell, & Elles, , The Law of Restrictive Trade Practices and Monopolies (Sweet & Maxwell, 2nd ed., 1966).Google Scholar

7 Sec. 2's coverage of “implicit” agreements is amplified by subsequent provisions. Sec. 3 embraces arrangements pursuant to which a person obtains a benefit if he observes a restraint specified in 2, or incurs a liability if he fails to do so; sec. 4 provides that the determination by a body of persons such as a trade association for its members regarding any of the specified matters is a cartel; sec. 10 that a cartel may be written or oral, express or implicit, and legally binding or not; sec. 12 that a person is a party to a cartel if he is interested and has tacitly consented thereto.

8 Secs. 5–10A. The singular narrowness of the exceptions for supplier-dealer agreements, and agreements between affiliated companies is discussed infra at nn. 64, 65.

9 Sec. 25. The Board can also issue prohibitory orders against the cartel or certain of its provisions, sec. 33. Before 1963, the law set a standard for prohibition of a cartel, not approval, thus apparently imposing a burden on the Board rather than on cartel proponents. It then provided that the Board shall prohibit a cartel “if it is of the opinion that [the cartel] is contrary to the public interest”. (1959) 13 L.S.I. 162. The U.K. statute is in similar terms but also provides that a restriction “shall be deemed contrary to the public interest unless” the U.K. Restrictive Trade Practices Court finds one of a number of specified benefits or “gateways”, and that the restriction is not unreasonable upon a balance of benefits and detriments (U.K. secs. 20, 21). Hence, the U.K. Law imposed a burden of justification upon proponents of restrictive agreements. See infra p. 440 for the Israel Board's interpretation of the pre-1963 provision.

10 Sec. 28. The Board's decisions are to be supported by reasons, and interested parties are entitled to hearing (secs. 25, 27). While the law does not explicitly state the Controller's role in cartel application proceedings, the Board early held that he was to be named respondent, because of his enforcement responsibilities. (Menashe H. Elyashar Ltd., Res. Prac. File No. 9, (1961) 25 P.M. 269). The Board can later reconsider its decision upon application of the Controller, a party to the cartel or “any person who considers himself aggrieved thereby” (sec. 26). Its orders are reviewable by the Supreme Court, limited to issues of law (sec. 36).

11 Sec. 19 (b). The appropriate “administrative authority” is defined in 19(a) as the Minister authorized to regulate the price or the mode of production or supply of the commodity or service involved, or a person authorized by the Minister for purposes of the Restrictive Trade Practices Law. In an early case, the Board Chairman rejected a certificate because the Minister's delegation was not adequate. Alliance Tyre & Rubber Co., Ltd. v. National Association for Tyre Marketing, Ltd. Res. Prac. File No. 69, (1961) 28 P.M. 40.

12 Sec. 45. See More, , “Restrictive Trade Practice—Cause of Action in Tort?” (1966–1967) 23 HaPraklit 78.Google Scholar

13 The number of registered cartels is far smaller than the number of restrictive practices files in the Registrar's Office (which had reached No. 301 by the May 1973 date cited in the text). This is because of the practice of opening a new numbered file whenever a cartel is submitted with changes (such as withdrawal or addition of parties) or an extension is sought at the expiration of a limited-term approval. Some individual cartels have reappeared a substantial number of times. In mid-1970, when there were 270 files, Dr. Shefer's examination of the records disclosed only about 120 separate and distinct agreements. Shefer, supra n. 1, 16 Antitr. Bul. at 417. This writer's review indicates that the 26 new files since that time include 12 additional agreements. Government reports persist in counting the files as the number of registered cartels. (See, e.g., Israel Government Yearbook for 5732 (1971–72) 232; Jaffe supra n. 1, 12 Antitr. Bull. at 937). The data on number and outcome of criminal proceedings by mid-1969 are in Shefer, 16 Antitr. Bull. at 431 and underlying material made available to the writer. For earlier data, see Jaffe, 12 Antitr. Bull. at 938 (mid-1967). For the number of investigative files, see Israel Government Yearbook for 5732 (1971–72) 232.

14 The “extent” orders are Restrictive Trade Practices Order (Monopoly Determination 1969, (1969/70) K.T. No. 2740, p. 326; Restrictive Trade Practices Order (Monopoly Determination) 1972, (1971/1972) K.T. No. 2809, p. 660. The latter order added three categories of goods and one of services, and broadened one of the prior categories of goods. The lone “control” order is Restrictive Trade Practices Order (Methods of Distributing Beer) 1970, (1969/70) K.T. No. 2589, p. 2008, which prohibits tying of other products to sales of beer, exclusion of other beverages from beer distributors, and discriminatory treatment of distributors handling other beverages. The order was issued following the beer monopolist's entry into soft drinks. In April 1973, the Law was amended to prohibit the arbitrary refusal to sell (or to buy) by a monopolist (or monopsonist). Such refusal is barred unless it accords with “accepted business practices”. Sec. 32a, as added by (1972/73) Sefer HaHukim No. 695, p. 148.

15 (1957) 23 Divrei HaKnesset 319–21; see also id. at 327, 349, 443. The Controller commented in 1961 that the Law came to avert the danger that “after termination of most of the controls, non-public factors would impose their own ‘regulation’ on the economy which is likely to be adverse to the public”. Controller of Restrictive Trade Practices, Report on Implementation of the Restrictive Trade Practices Law, 1959, for the Period Jannuary 1960–July 1961, (1961) 35.Google Scholar

16 (1957) 23 Divrei HaKnesset 354.

17 Id. at 327.

18 Id. at 319–21, 327–28, 349–50, 353, 363, 365, 443.

19 Id. at 321.

20 Id. at 326–27, 357–58, 382, 385–86.

21 Id. at 385–86.

22 Memorandum dated May 10, 1954, “Suggestions Relating to the Problem of Restrictive Business Practices; Recommendation of Competitive Practices Authority”, pp. 5–6, by Harold Leventhal (now Judge, U.S. Court of Appeals, District of Columbia Circuit).

23 (1957) 23 Divrei HaKnesset 327, 350, 386, 598, 601.

24 Id. at 348, 353.

25 Id. at 327, 352, 359–60, 380.

26 Id. at 382, 283.

27 Id. at 349, 353; (1959)27 Divrei HaKnesset 2738.

28 The earlier history was recalled in the 1957–59 debates, (1957) 23 Divrei HaKnesset 325, 346, 351, 355, 385.

29 Id. at 325–26, 379–80, 442; (1959) 27 Divrei HaKnesset 2734–36.

30 To some extent, these arguments were misplaced because based upon government policies no longer in effect, or upon a misunderstanding of certain provisions in the Law. By the time of these debates, the Government had assertedly abandoned prior resistance to the growth of the private sector and was assisting private investment with large resources. (1957) 23 Divrei HaKnesset 350, 381. As to the statutory provisions, opponents of the Bill argued that the exemption for agreements among affiliated corporations exempted the Histadrut industrial sector. Yet only a minority of Histadrut enterprises (estimated by one speaker at one-third) were in a parent-subsidiary relationship, as required to qualify for exemption. All others, including the affiliated cooperatives, were to be fully subject to the Law in their agreements with other firms (Histadrut or private), it was contended. (1957) 23 Divrei HaKnesset 350, 353, 365, 597; (1959) 27 Divrei HaKnesset 2739. For example, see Hamashbir Latsarkhan v. Controller of Restrictive Trade Practices, Res. Prac. File No. 291, Decision December 9, 1971 (agreement for joint purchasing by Histadrut stores; approval sought because stores were organized as separate cooperative societies).

31 (1957) 23 Diurei Haknesset 353, 358–59, 445–46, 596.

32 Id. at 596–97.

33 (1959) 27 Divrei HaKnesset 2739; see (1957) 23 Divrei HaKnesset 359.

34 Id. at 327, 359, 381–82, 446–47, 599.

35 Id. at 326, 328, 595–96, 598.

36 Id. at 596.

37 State Comptroller, Annual Report No. 13 for 1962 (1963) 185–89; Annual Report No. 16 for 1965 (1966) 318–19.

38 State Comptroller, Annual Report No. 18 for 1967 (1968) 339.

39 (1957) 23 Divrei HaKnesset 321.

40 Shefer, supra n. 1, 16 Antitr. Bull. at 424.

41 Leventhal memorandum, op. cit. supra n. 22 at pp. 11–12.

42 Controller of Restrictive Trade Practices, Report on Implementation of Restrictive Trade Practices Law, 1959 for the period January 1960–July 1961, pp. 11–12, 29–31; Jaffe, supra n. 1, 12 Antitr. Bull. at 936; State Comptroller, Annual Report No. 13 at p. 186; Annual Report No. 18 at p. 333. The reports of the State Comptroller show a unit of 10 in 1961, down to 5 full-time in 1967, both in addition to assistance of other Ministry offices. In 1967, the Controller stated that “actual enforcement” is “mostly in the hands of the Ministry's field staff”. At present, the Controller has a few assistants for office work, but no investigatory staff.

43 Jaffe, supra n. 1, 12 Antitr. Bull. at 936.

44 State Comptroller, Annual Report No. 18 at p. 337. Shefer, supra n. 1, 16 Antitr. Bull. at 429–30.

45 Controller's Report, supra n. 42.

46 Controller's Report, supra n. 42 at pp. 13–14.

47 State Comptroller, Annual Report No. 13 at p. 186.

48 See advertisement of Pioneer Concrete (Israel) Ltd., Ma'ariv, March 16, 1972, p. 12.

49 Among the situations described to the writer, food processors negotiated price increases with the Ministry under price freeze regulations. Approval was granted for only part of the increases sought, and the processors thereupon privately agreed to restrict credit to customers (thus achieving a further indirect increase). Ministry officials thereafter indicated acquiescence, on the ground that restrictions on credit conform to the anti-inflation policy. No filing was made with the Controller, even though an agreement on credit arrangements clearly is subject to the Restrictive Trade Practices Law, see infra nn. 114, 122. For an example of alleged restrictive arrangements in regulated industries, see the reports of bank practices in trading in short-term government securities. Ma'ariv, May 29, 1973, p. 21. As an index of compliance, only two new cartels were registered in the 15 months ending May 1973. During that time, three prior approvals expired and no renewal was sought.

50 Dagan Flour Mills, Ltd., v. Minister of Commerce and Industry, (1972) (I) 26 P.D. 292, 295. Even more astounding, is that the Government thereby acquiesced in a cartel which frustrated an announced policy of the Minister. Up to 1969, the 22 flour mills had operated under strict government controls, receiving wheat from the Government according to fixed quotas, and selling flour at government-fixed prices. In 1969, the Minister of Commerce and Industry issued a directive terminating the quota system on the ground that it had “adversely affected the quality of milling and the level of services”. He declared that “the time had come to make competition possible”, and that the Government would thenceforth sell wheat without limitation. The competitive goal was frustrated by the private arrangement, the Court stated. The opinion does not explain why the Ministry immediately reversed its position and condoned the cartel.

The cartel broke up in March 1971 when several firms withdrew. In response to industry requests, the Ministry then reinstituted a quota system, which was made applicable to 80 per cent of the wheat supply, with 20 per cent to be sold on open bids. In the Dagan case, the Court invalidated the criteria applied in assigning the new quotas because they failed to provide a pro rata share for a new mill built during the period of so-called “liberalization” when competition was nominally encouraged. In its discussion, the Court described the Government's rationale for a quota system—maintaining reserve capacity and geographic distribution against emergency needs—which it did not question; but took a less favourable view of the millers' position of “preferring a protected life in a government hothouse to growth in free competition” (ibid.). Recently, a restrictive agreement was registered by 21 of the flour mills, having 85.71% of the Ministry quotas, pursuant to which they seek to adjust these quotas by transferring portions among themselves for a four-year period. Application for approval is pending before the Board, but the agreement has gone into effect under a temporary permit upon recommendation of the Ministry. Ein-Hai Flour Mill, Ltd. v. Controller of Restrictive Trade Practices, Res. Prac. File No. 301, Application filed April 18, 1973. Since the Ministry approves, it is difficult to see why the quotas were not changed by it, rather than by private agreement—unless the new percentages would not be justified by any rational criterion (such as capacity) or policy (the proposal reduces two mills to zero).

51 Controller's Report, supra n. 42, at pp. 23, 43–46.

52 Ibid.; State Comptroller, Annual Report No. 13 at pp. 187–88.

53 Controller's Report at pp. 17–19, 43. The Minister is cited for the observation that “standardization is preferable to competition, on the ground that competition reduces the profitability of manufacturing without lowering prices to the ultimate consumer” (p. 19). The Director-General of the Minister is quoted as saying: “I am for a cartel if it results in increased production, larger exports, restrictions on credit in the domestic market, more rational allocation of manufacturing, greater organization and efficiency in the economy, reduction in costs. We are against a cartel that artificially maintains prices by preventing free competition through restriction of output” (p. 17); see also, Jaffe, supra n. 1, 12 Antitr. Bull. at 944. In the same spirit, a recent Ministry report expressed doubt whether, from the standpoint of public benefit, there was significant difference between an oligopoly of five relatively small firms, a smaller number of larger firms, or even monopoly. Ministry of Commerce and Industry, Goals for the Development of Industry in Israel 1972–1981, p. 39.Google Scholar But see other portions of the report more favourable to competitive policy, cited infra n. 141.

54 Controller's Report, supra n. 42 at p. 21.

55 Controller's Report, supra n. 42 at p. 31.

56 Shefer, supra n. 1, 16 Antitr. Bull. at 416, 421. This article noted that the Controller has had considerable freedom in areas in which other Ministry branches had little interest, such as resale price maintenance, which he generally opposed. It would equally follow that the Controller's policy-making role was severely curtailed, and weakened, when cartels came to issue in whose creation other branches had been actively involved. The latter proceedings, as we shall see, were particularly critical for the Board's independent adjudicative function.

57 It has been stated that the elimination of formal price controls in the late 1950's simply gave rise to “an all-pervading system of informal non-statutory price control”, so that few important producers would raise prices without advance discussions with the Government and its acquiescence. Shefer dissertation, supra n. 1 at p. 264. This does not mean that prices have been regulated according to rates of return or other regularized criteria.

58 Commodities and Services (Control) Law, (1957), 12 L.S.I. 24.

59 Jaffe, supra n. 1, 12 Antitr. Bull. at 934; Shefer supra n. 1, 16 Antitr. Bull. at 430.

60 Even though the Controller (and the Board as well) cannot take action regarding monopolies, but only propose it, it is submitted that the failure of enforcement has significant detriments here as well. For the regrettable fact is that one element of convenience for the Ministry in the present approach to monopolies is that it does not need to act on the basis of articulated reasons, which would be subject to scrutiny, criticism, and to some extent to effective judicial review. A procedure by which the Controller made recommendations for monopoly control would tend to produce such reasons, and presumably more consistent and publicly-responsible regulation.

61 (1957) 23 Divrei HaKnesset 362–63, 379, 383, 384; (1959) 27 Divrei HaKnesset 2736.

62 Secs. 40, 42. The original legislative proposal provided criminal penalties only for carrying out a cartel before registration or after Board disapproval or for otherwise violating a Board order (except for cartels related to bid tenders which would have been illegal until approved). Thus, while the Bill contained broad registration coverage, it would have permitted registered agreements to continue until voided or limited by the Board. See secs. 23, 25, 41–43 of the Bill, (1957–58) Hatza'ot Hok no. 327, pp. 86, 88, 90 and explanatory note, p. 92. Between this proposal and the enactment, the prohibitory provisions were changed to bar all restrictive agreements until approved but the breadth of registration was retained. See Controller's Report, supra n. 42, pp. 38–39.

63 Israel Banking Association, Res. Prac. File No. 177, Decision January 16, 1964.

64 As initially enacted, the sec. 10 exemption applied to any vertical exclusive. The reciprocity condition was adopted in 1963 in order to prevent evasion by competitors' use of a common selling agent, prompted by a particularly egregious instance. See the comments on the 1963 amendments, (1962/63) Hatza'ot Hok no. 530, pp. 2, 4. The problem could have been solved more aptly by finding that use of a common agency by competing suppliers was in effect a horizontal combination of the suppliers not to compete. But it was in keeping with the pattern of the Law simply to broaden the registration requirement.

65 The 1963 amendments to the Law also narrowed the exception in sec. 9 in a way that produced as bizarre a result as in sec. 10. The original provision exempted arrangements between “a company and its subsidiaries, or subsidiaries of one company”. The 1963 amendment confined sec. 9's exemption to arrangements “the parties to which are a parent company and not more than one subsidiary”. The purpose was to prevent evasion of the Law by creation of an artificial parent, again prompted by abuse (as explained in the legislative history, see supra n. 64). Instead of attacking the sham relationship among independent competitors (cf. United States v. Sealy, Inc. 388 U.S. 350 (1967)), the exception was narrowed. Literally applied, which no one has tried to do, the present Law would require registration of intra-corporate allocations of production and marketing if more than one corporate subsidiary is employed.

66 Controller's Report, supra n. 42, at pp. 38–41.

67 Jaffe, supra n. 1, 12 Antitr. Bull. at 942.

68 Shimoni v. Ulamei Lehayim, Ltd. (1971) (I) 25 P.D. 824. Shimoni, the photographer, requested arbitration under the contract. Ulamei Lehayim then commenced suit to prevent arbitration on ground that the contract was illegal. The district court so held, and was reversed by the Supreme Court.

69 Id. at 835–40. For the principal opinion's sense of outrage, see p. 829. Cf. Perma Life Mufflers v. International Parts Corp. 392 U.S. 134 (1968), on the application of the in pari delicto doctrine in antitrust cases.

70 Id. at 831–32, 834–35.

71 Id. at 829. Of course, the statute does not itself invalidate agreements covered by sec. 2, but only requires their submission to the Board. The Court failed to distinguish between the requirement of registration (and submission) and the issue of validity determined in a subsequent Board proceeding. To that extent, its concern about incriminating large numbers of businessmen is somewhat misplaced. Its criticism is justified, however, to the extent registration applies to agreements which the parties could not imagine were registrable.

72 The Court (id. at. 830) sought to rely upon an English case applying the common law of “restraint of trade” in the realty situation. The case is Esso Petroleum Co., Ltd. v. Harper's Garage (Stourport) Ltd. [1967] (I) All E.R. 699, which held that exclusive agreements between Esso and garages were restraints of trade at common law and which found unreasonably long restraints illegal, rejecting the argument that the common law doctrine did not apply to restrictions related to land or covenants in a mortgage. Justice Landau relied upon dicta in which the British Court distinguished the “naked restraints” in the Esso contracts from restrictions imposed upon a sale or lease—the latter were said to be outside the common law doctrine. However, the Esso case did not apply or construe the U.K. Restrictive Practices Act. Its narrow reading of the traditional common law categories of restraint do not appear to be appropriate guides for interpreting a statute providing broad registration to enable evaluation of restraints by a specialized tribunal. One reason for distinguishing restrictions imposed by property owners on lessees or licensees might be that a prohibition would be futile because the owner would simply eliminate the lease or licence and undertake to supply the service or product himself (or through employees). United State antitrust law tends to draw a rigid line based on the existence of an employment relationship, all contracts with non-employees being fully subject to antitrust strictures. This rule may be criticized, particularly in the oil company-service station situation. The oil company's choice between employee or independent contractor status for the station operators has principally been a function of tax and labour law considerations. Thus the U.S. rule has not proved an effective guide to competitive prospects or very useful as a standard of antitrust legality. But that criticism goes to the merits of validity, not to the utility of the concept for the scope of registration. Note, however, that in its order dealing with exclusive arrangements (“solus ties”) in gasoline distribution, the U.K. Board of Trade distinguished between contracts with independent petrol retailers, and leases or licences of company-owned stations. Solus Petrol (No. 2) Order 1966, see Wilberforce, Campbell & Elles, supra n. 6, (1969 Supp.) sec. 1407.

73 E.g., Northern Pacific Ry. Co. v. United States 356 U.S. 1 (1958); Simpson v. Union Oil Co. 377 U.S. 13 (1964); see FTC v. Texaco, Inc. 392 U.S. 223 (1968); Atlantic Refining Co. v. FTC 381 U.S. 357 (1965).

74 The contention that the right to exclude vahdates lesser restrictions is reminiscent of similar claims by patentees, which have long since been rejected. E.g., United States v. Masonite Corp. 316 U.S. 265, 277 (1942); Motion Picture Patents Co. v. Universal Film Mfg. Co. 243 U.S. 502, 514 (1917). See Turner, , “Patents, Antitrust and Innovation” (1967) 28 U. Pittsb. L.R. 151.Google Scholar Note that the Israeli Law provides a specific exception for arrangements “all of whose restraints relate to the right to use a patent, design, trademark or copyright” (sec. 6).

75 The effect of exclusivity arrangements depends principally upon whether such arrangements cover a substantial part of the market; whether exclusivity is inherent in the situation or avoidable; and, if inherent, whether the term of exclusivity is reasonable. See Standard Oil of California v. United States 337 U.S. 293 (1949); FTC v. Motion Picture Advertising Co. 344 U.S. 392 (1953); Standard Fashion Co. v. Magrane Houston Co. 258 U.S. 346 (1922). It should be noted that, while the objective is to have registration catch all transactions with potentially substantial competitive effect, it can only reach agreements having specified restrictive provisions. A sale without such provisions is not registrable, and that proposition would appear to hold even if the sale is so large, e.g., for all requirements for a term of years, that it could have substantial competitive effects. Cf. Tampa Electric Co. v. Nashville Coal Co., 365 U.E. 320 (1961).

76 (1971) (I) 25 P.D. 834–35.

77 This conclusion is similarly supported by a Board decision which, as in Shimoni, strained for an interpretation of the statutory language in order to narrow the registration obligation. The Board ruled that a covenant not to compete ancillary to the sale of a business was not subject to registration on the ground that the seller making such promise is leaving the field and, therefore, is not a person “carrying on business” within the meaning of sec. 2. Razonkol Ltd., Res. Prac. File No. 148, Decision June 17, 1963, discussed in Zeltner, , Contracts (Tel Aviv, 1965) Vol. 2, pp. 98–99.Google Scholar While again the result is understandable, such a reading if given free rein would suggest that there may be difficulties in imposing registration on a division of markets betwen potential competitors—certainly not intended.

78 For the U.K. legislation, see supra n. 6. A similar solution is suggested by the antitrust law of the Common Market, under Article 85 of the Treaty of Rome. The governing regulation of the Council of European Communities provides for the provisional validity of all restrictive agreements which are registered or filed (Regulation 17, art. 15(5)) as well as of certain classes of agreements under a blanket order (Regulation 17, art. 4(2)). Thus, registered agreements are valid until disapproved. Under the European Communities law (unlike Israel or the U.K.), registration is optional except that it is a requisite for an application for exemption of restrictive agreements under the public interest criteria of Article 85(3) of the Treaty of Rome. Regulations in the Common Market and the U.K. provide examples for implementing registration in problem areas.

79 Sec. 13. This section provides for a “board of at least five persons”. The number of members has varied from six to nine, Jaffe, supra n. 1, 12 Antitr. Bull. at 986.

80 (1957) 23 Divrei HaKnesset 321.

81 (1957) 23 Divrei HaKnesset 350, 386, 388, 445; (1959) 27 Divrei HaKnesset 2732; Controller's Report, supra n. 42, at 23, 42. The report of the American consultant had rejected the idea that decisions of the antitrust tribunal be subjected to veto by the Minister of Commerce and Indusry on the ground that this “would be inconsistent with the basic conception of an objective, independent tribunal” (Leventhal Memorandum, supra n. 22 at pp. 16–17, 19).

82 Jaffe, supra n. 1, 12 Antitr. Bull. at 936.

83 See supra n. 6.

84 State Comptroller, Annual Report No. 13 for 1961 (1962) 186. Shefer, supra n. 1, 16 Antitr. Bull. at 425.

85 One uncontested case heard this session was the renewal of the Plywood cartel, which the Board summarily approved on the basis of a compromise arrived at between the parties without inquiring into serious objections earlier filed. See infra, n. 116. To contrast an adversary proceeding, in February 1973 the Board held a lengthy hearing with witnesses and arguments, in the Pazgas case (see infra) in which vigorous opposition was presented by the Israel Consumer Council and an association of building contractors (but not by the Controller). Reliance on adversary presentation is an aspect of judicialization of the Board's function. One non-lawyer member stated that he did not think it proper to use information personally known to him in deciding the merits, but would seek to bring out such facts by questioning and to prevent overt error in Board opinions; yet Board members are supposedly chosen in part for their expertise. The Board has authority to summon witnesses on its own initiative, but it has not done so. Shefer, supra n. 1, 16 Antitr. Bull. at 426–27.

Pazgas was the application of three gas companies to act jointly in the supply of central gas installations for multiple dwellings. The cartel developed after competition had reached the point that the companies were paying contractors for the right to make such installation (and then seeking to recover the amounts by inflating charges to the flat purchasers). After the extended hearing, the Board accepted the position of the Controller and approved the cartel in a brief order “by majority vote and with some hesitation”. The approval was subject to a list of conditions recommended by the Controller and for a one-year term only, after which the Board promised a strict review to see whether, indeed, the public interest had been served. However, the Board's order did not indicate in what respects it expected the public interest to be served. It did not discuss the objections of the protesting parties and did not make findings or evaluations in terms of the statutory criteria. Pazgas v. Israel Consumer Council, Res. Prac. File No. 298, Decision April 30, 1973. See infra n. 126.

86 Supra at n. 36. As noted, the point was stated with regard to the public and Histadrut sectors, but it clearly has broader implications.

87 Shefer dissertation, supra n. 1 at 262. Dr. Shefer's view accordingly, was that, although there could be advantages in having cartels investigated and appraised by an independent body, “the final word on cartels should … rest with the government” in order “to ensure consistency in economic policy”. Shefer supra n. 1, 15 Antitr. Bull at 788; Shefer dissertation, supra n. 1, at 276, 279–80.

88 Association of Liquor Manufacturers, Res. Prac. File No. 3, Decision November 9, 1961, (Liquors, hereinafter), petition denied. W.S.T. Wine & Liquors Manufacturing, Ltd. v. Chairman, Restrictive Trade Practices Board, (1962) 16 P.D., 1317. See National Association of Tyre Marketing Ltd. v. Minister of Commerce & Industry, (1961) 17 P.D. 319, 326.

89 Bicycle Tyres—Gamid, Ltd. v. Controller of Restrictive Trade Practices Res. Prac. File No. 2, (1961) 28 P.M. 363, 366 (Bicycle Tyres).

90 Liquors, supra n. 88.

91 Chemochlor, Ltd. v. Controller of Restrictive Trade Practices, Res. Prac. File No. 39, Decision May 25, 1961 (Hypochlorite). The statement was qualified, in that low prices were said to be in the public interest so long as they do not interfere with the attainment of another aspect of the public interest. But in that case, the Board rejected all other arguments in favour of the cartel, including preservation of the enterprise, employees' jobs, etc.

92 Menashe H. Elyashar Ltd., Res. Prac. File No. 9, Decision February 9, 1961, (1961) 25 P.M. 269, 271–72 (Imported Cigarettes); Hadar—B.Shaplin Ltd. v. Controller of Restrictive Trade Practices, Res. Prac. File No. 31, Decision June 8, 1961 (Cigarette Packages). United Zincographers, Ltd. v. Controller of Restrictive Trade Practices, Res. Prac. File No. 13, Decision June 29, 1961 (Zincography).

93 In re Tifereth Hasharon Registered Partnership, Res. Prac. File No. 138, Decision November 18, 1962 (Movie Theatres).

94 Bicycle Tyres, supra n. 89; Cigarette Package, supra n. 92; Zincography, supra n. 92.

95 Cigarette Packages, supra n. 92.

96 Liquors, supra n. 88.

97 Liquors and Bicycle Tyres, supra nn. 88, 89; see Lux-Or Lighting Co., Ltd., Res-Prac. File No. 15, Decision January 18, 1962 (Lamps).

98 Bicycle Tyres, supra n. 89.

99 Bicycle Tyres, supra n. 89; Hypochlorite, supra n. 91.

100 Liquors, Bicycle Tyres, and Hypochlorite, supra nn. 88, 89, 91. In re PACA Co., Ltd., Res. Prac. File Nos. 7, 24, Decision February 9, 1961, (1961) 25 P.M. 261, 265.

101 In Hypochlorite, supra n. 91, the cartel comprised three firms who produced and sold according to fixed quotas. For one hypochlorite was a sole product. The other two were more recent entrants who manufactured it as an incidental by-product, and at lower cost. In the Board's view, there was no public interest objective in maintaining the first firm's plant, if all anticipated demand for the product could be supplied adequately and more cheaply by the others. The Board was not impressed with the prospect that failure of the firm would lead to discharge of employees, because the country's shortage of labour assured other employment. It was also not impressed by the fact that the threatened firm had originally been established (in 1952) as an “approved enterprise” entitled to investment benefits. “That fact by itself cannot forever justify excessive prices or waste of foreign currency when technological development makes the method of manufacture obsolete”. It is interesting that approval in this case was opposed by the Controller, even though the Board's opinion indicates that the cartel was arranged at the instance of the Chemicals Department of the Ministry of Commerce and Industry.

102 Thus, in the book industry, the Board indicated that establishment of a common price was a benefit. Israeli Publishers Association v. Controller of Restrictive Trade Practices Res. Prac. File No. 46, Decision December 5, 1963, (1963) 38 P.M. 119 (Books). In a resale price maintenance case, the Board apparently accepted contentions that the price mark-up was reasonable, that price competition could adversely affect quality, that abuses could be remedied later, and that the public interest was not the same as the consumer interest. Osem Food Manufacturing Ltd. v. Controller of Restrictive Trade Practices Res. Prac. File No.60, Decision February 16, 1961, (1961) 25 P.M. 360 (Osem). Another decision found no evidence of detriment from a common price list for dental compounds—although the Board may have concluded that in effect the list only suggested prices. Holland-Israel Ltd. v. Controller of Restrictive Trade Practices Res. Prac. File No. 56, Decision May 18, 1961.

103 Osem, ibid.

104 In Books, supra n. 102, the members of the Publishers' Association had agreed to establish and enforce resale prices in bookstores; to establish a standard discount to bookstores; to refuse discounts to newspapers (for book club-type distribution) below a fixed level; and to require participating stores to sell only the books of cooperating publishers. The agreement included nearly all publishers—but not the important Histadrut-affiliated houses. The Board found that it would result in separate book distribution for those within and without the cartel, and would therefore impair access to the market, impose higher costs and cause other detriments. The Board declined to accept the contention that there was a “crisis” in Hebrew belles-letters that justified cartelization; and found, in any event, that elimination of competition was not an apt remedy for any problem which did exist.

105 Israeli Pharmacists Association Res. Prac. File Nos. 75, 94, 95, Decision July 6, 1961; denial of application for reconsideration October 11, 1962. The Pharmacists' Association had entered into agreements with the Defence Ministry and with several large health insurance funds, under which the Association was to arrange for its members to supply pharmaceuticals to the insured and to disabled veterans, with the Association billing on behalf of the members. The Board approved the agreements except for a provision that would have obligated the Ministry and the funds not to do business with individual pharmacists who were not members of the Association. Even though there were few such operators, the Board found it unfair and unreasonable to apply economic pressure on them to join. And it gave short shrift to a subsequent request for reconsideration by the Defence Ministry, which urged that it experienced administrative difficulties in individual billing. The Board viewed its decision as based upon a respect for individual rights, and found it distressing that a government agency would seek to back economic coercion because of a cost saving. It was particularly regrettable that the Controller supported the Ministry's request, the Board stated.

106 See the descriptions in State Comptroller, Annual Report No. 12 for 1961 (1962) 147–51; Shefer, supra n. 1, 16 Antitr. Bull. at 417–418.

107 State Comptroller, Annual Report No. 12 for 1961 (1962) 147–48.

108 Shefer, id. at 418.

109 Yitzhar Israel Oil Manufacturing Ltd. v. Controller of Restrictive Trade Practices Res. Prac. File No. 174, Decision October 22, 1964, (1964) 42 P.M. 126 (Vegetable Oils).

110 (1964) 42 P.M. 134–36.

111 State Comptroller, Annual Report No. 12 for 1961 (1962) 150–51.

112 In a number of cases, indeed, opposition to the cartel was most strongly voiced by Israeli firms which purchased the cartel's product as an intermediate for use in their own manufacturing processes—e.g., margarine producer in Vegetable Oils; furniture producers in Plywood; fabric producers in Wool Spinners. In the plywood cartel for example, an alleged goal was to assure that the better quality product went abroad, notwithstanding the heavy local demand. The argument, however, gave little weight to the indirect effect of hampering local furniture production, by higher domestic prices and restriction of supply.

113 See supra n. 9. Dr. Shefer stated that the change in the burden of proof “has not had so far any noticeable effect on the performance of the Board”. Shefer, supra n. 1, 16 Antitr. Bull. at 428. Nor was the Board asked to reconsider the few prior decisions in which it approved cartels in reliance upon the pre-1963 statutory burden on opponents. A notable example was a resale price maintenance case, Osem, supra n. 102, in which the Board also relied upon the fact that the U.K. Restrictive Practices Act did not then extend to vertical pricing arrangements. The Israel burden of proof changed in 1963 and the U.K. precedent was overturned by the Resale Prices Act of 1964. Osem has not been re-examined.

114 Thus, the Board accepted the export goal, notwithstanding the concession that the results could have been attained without the cartel. And it cited other alleged benefits of cooperation which did not justify or require combination in production and marketing—these were the companies' agreement to contribute to a joint research fund and to restrict customer credit. The latter agreement moreover, although commended as advancing an anti-inflation goal, was a questionable means for that end. As urged by the dissenting Board member, credit reduction is a one-time anti-inflation measure which is not a suitable basis for a restrictive agreement determining industry structure for years. Furthermore, while the agreement helped applicants' financial condition, it was not clear that it would significantly affect credit in the economy (this would depend, for example, on what happened to the, credit available to the cartel members). See (1965) 42 P.M. 135.

115 The 1970 proceeding in Vegetable Oils is Res. Prac. File No. 261, Decision June 15, 1970. The Government's reasoning was earlier set forth in State Comptroller, Annual Report No. 18 for 1967, (1968) 335–36, which also noted that while cartel members had increased exports and reduced credit to customers, they had failed to comply with other 1965 conditions regarding research, exchange of knowhow, standardization of production or joint marketing. The Board's 1970 opinion indicates that at least one of the deficiencies was cured by establishment of a research fund. The 1970 opinion also described the peculiarity of the industry's position, because of the Government's provision of vegetable oil from U.S. agricultural surplus (which by terms of the sale must be consumed domestically), and its control of supplies of seeds from which the export oil was manufactured. The subsidized export utilized idle capacity, but seemed otherwise of little value to the economy.

116 Israel Plywood, Ltd. v. Controller of Restrictive Trade Practices Res. Prac. File No. 202, Decision October 26, 1965, (1965) 48 P.M. 158 (Plywood). The plywood cartel operated from 1960 to 1965 under temporary permits. Initial government support was based upon the equalization fund; there were then added joint purchasing, joint research, knowhow exchange, and reduction in credit. In 1964, the Ministry asserted that it would not support the cartel without a programme for more efficient production, allocation of costs, etc. State Comptroller, Annual Report No. 16 for 1965 (1966) 316–19. The conditions to assuage plywood purchasers barred tie-ins, established a complaint committee and promised that the cartel would sell from the plant desired by a buyer to the extent possible.

In Plywood, the covert subsidy by means of the cartel was supplemented by another indirect device—providing the plywood manufacturers with a protected position in sales of sawed lumber to the domestic market. Substantial profits on such domestic lumber sales were supposed to enable them to reduce export prices of plywood (and the lumber sales were limited to a proportion of plywood exports). To make this feasible, the government refused to permit import of logs or lumber by companies not engaged in the plywood business. This programme was described in a decision rejecting an attack upon it by one potential sawmill enterpreneur, Lentz v. Minister of Commerce and Industry (1962) 16 P.D. 1289.

117 State Comptroller, Annual Report No. 18 for 1967, (1968) 336.

118 The 1971 Plywood case is Res. Prac. File No. 264, Decision December 9, 1971.

119 Aderet Co. v. Controller of Restrictive Trade Practices Res. Prac. File No. 248, Decision November 1, 1968 (Wool Spinners).

120 Cargal Ltd. v. Controller of Restrictive Trade Practices Res. Prac. File No. 265, Decision June 25, 1969. Earlier in 1967, the State Comptroller had found that the cartel's exports had decreased, and there had been no study of the reasons or of the fulfillment of other conditions set by the Ministry. State Comptroller, Annual Report No. 18 for 1967 (1968) 336.

121 Controller's Report, supra n. 42, p. 35.

122 Id. at 16, 21. Examples of conditions imposed are set forth in Kaplan supra n. 1, at pp. 393–94 and footnotes. The 1967 report of the State Comptroller classified the conditions present in the 35 then outstanding cartel approvals as follows: a promised increase in exports (14 cases); stable prices, normally that increases would be subject to Ministry approval (21); efficiency and organization of production (13); allocation of manufacturing quotas (14); improvements in quality, normally by subjecting the companies to supervision of the Israel Standards Institute (4); and reduction of credit to customers (7). State Comptroller, Annual Report No. 18 for 1967, (1968) 333.

123 Id. at 335; Shefer, supra n. 1, 16 Antitr. Bull. at 439–40.

124 Jaffe, supra n. 1, 12 Antitr. Bull. at 947. Dr. Shefer's similar conclusion was that “in the majority of cases” cartel performance “has fallen far short of their own promises and of the authorities' expectations”, Shefer, supra n. 1, 16 Antitr. Bull. at 421. In the mid 1960's a staff study by the Ministry of Commerce and Industry had disclosed that exports increased in only one-half the cases in which this was a condition of approval; and the companies undertook rationalization or specialization of production and distribution in only about one-third of the cases in which it was promised. See id. at 419–21; State Comptroller, Annual Report No. 18 for 1967 (1968) 335.

125 Id. at 335, 337; Jaffe supra n. 1, 12 Antitr. Bull. at 947.

126 See the approval in 1973 in Pazgas, supra n. 85 and the expressions of doubt that accompanied earlier decisions, at nn. 114–120.

127 Restrictive Trade Practices Act 1968, chap. 66, secs. 1, 2. Sec. 1 provides an exemption upon determination by the Board of Trade that a restrictive agreement is reasonably calculated to promote an industrial or commercial project of substantial importance which will create or improve productive capacity or efficiency, that the goal could not be achieved (or could not be achieved within a reasonable time) except by the agreement, that there are no restrictions other than are reasonably necessary to the objective, and that the agreement “is on balance expedient in the public interest” taking account of the effect on purchasers, consumers or users. The term of approval must also be specified. Sec. 2 provides an exemption for agreements relating exclusively to prices and “designed either to prevent or restrict increases or to secure reductions in those prices”, upon approval by an appropriate competent authority for a period up to two years. The competent authorities for sec. 2 are a number of designated Ministers.

128 A policy of prohibiting or limiting anti-competitive behaviour tends to lead to governmental concern about transactions like mergers which affect markets, because of the judgment that market structure exerts a basic long-run influence upon competitive behaviour. This is illustrated by antitrust legislation in various countries which moved from restrictive agreements and practices to mergers. See, e.g., the development of merger law in the U.S. (section 7 of the Clayton Act, as amended in 1950, 15 U.S.C. sec. 18); in the U.K. (Monopolies and Merger Act 1965, c. 50); and in the Common Market (Article 86 of the Treaty of Rome as construed by the Court of Justice of the European Communities in Europemballage Corp. & Continental Can Co., CCH Common Market Reporter, §8171 (Feb. 21, 1973).

129 Note that when additional authority was vested in the Board in 1964 to determine the validity of restrictive provisions in standard contracts, the later law provided for decision by a tribunal of three members drawn from the Board. See infra n. 158.

130 E.g., (1957) 23 Divrei Haknesset 598–99.

131 See Kaysen, & Turner, , Antitrust Policy (Harvard U. Press, 1965) chaps. 1, 6Google Scholar; Scherer, , Industrial Market Structure and Economic Performance (Rand McNally & Co., 1970) chaps. 2, 22.Google Scholar

132 Facts about Israel 1972, (Keter, 1972) 92, 112. Of these establishments, about 5,700 had 5 employees or more, about 3,300 had 10 employees or more, and only 750 had 50 employees or more. Statistical Abstract of Israel (1972) no. 23, pp. 154–5, 392. For contrast, see Fortune Magazine list of the top 500 largest U.S. corporations in 1970, published in the May 1971 issue, p. 172.

133 Shefer dissertation, supra n. 1, pp. 135–45. Dr. Shefer reviewed three studies which were carried out by staffs of the Bank of Israel (using 1958 data in 5 digit census categories), the Ministry of Finance (using 1961 data, also published in Israel's Economic Quarterly May 1965, p. 19), and the Ministry of Commerce and Industry (using 1962 data in 4 digit census categories). The 1958 study indicated that about one-half of industrial output was in markets where the top 3 had more than 70 per cent. The 1961 study indicated one-quarter of output in monopolies or duopolies, about 55 per cent in various stages of oligopoly. The 1962 study indicated that about one-third of output was in predominantly noncompetitive markets (two with over 60 per cent) and one-quarter predominantly competitive (two with less than 40 per cent), the rest in between. After seeking to adjust for variations in the data, Dr. Shefer arrived at 44 per cent predominantly non-competitive, 40 per cent predominantly competitive. As to overall industry concentration, it is reported that during the past decade 300 plants representing the three largest in each sub-branch accounted for more than 50 per cent of the manufacturing output of all plants in Israel with ten or more employees. Ministry of Commerce and Industry, Goals for the Development of Industry in Israel 1972—1981, p. 38.Google Scholar

134 E.g., Scherer, supra n. 138 at pp. 52–57.

135 Such a finding was recently announced by the Government in its publication of a proposed law to regulate unfair trade practices: “The expansion of manufacturing in Israel, the refinement of marketing, promotional and advertising techniques, mobility of the consumer public—all these provide a possibility, even incentive, for free market competition”. The proposal goes on to introduce the Bill with the further statement that there is no doubt that such competition can yield substantial benefit to the economy, so long as it is carried on within the bounds of fair practices. Trade Practices Bill 1972, (1971/2) Hatza'ot Hok no. 991, p. 200. For the growth in GNP cited in the text, see Statistical Abstract of Israel No. 22 (1971) 148–49. It was recently reported by the Finance Minister that Israel had attained a per-capita gross national product which was 18th in the world (among 122 states with a population of one million or more). In absolute size, Israel GNP ranked 48th among those states. The Jerusalem Post, November 20, 1972, p. 3.

136 Thus in chemicals and oil, the number of establishments declined from 203 in 1965–66 to 170 in 1969–70, while the gross output was rising from IL 161.8 to 299.4. Statistical Abstract of Israel No. 22 (1971) 368–69, 370–71. Indeed, the country's total number of industrial establishments with 5 employees or more declined from a peak 7,165 in 1965–66 to 5,733 in 1970–71, while gross industrial output showed sharp increase. Id. at 367, 368. There was apparent a process of rapid expansion, followed by shaking-down and rationalization. In addition, several of the early cartels became monopolies through merger. Shortage of private capital sources also seems to be at the basis of a current centripetal tendency in parts of Israeli industry—the aggregation of industrial firms by holding companies related to the major banks. Conglomerate acquisitions have generated public attention and is a reason for providing regulatory authority over mergers. See text at n. 129.

137 Jaffe supra n. 1, 12 Antitr. Bull. at 945–46, Shefer, supra n. 1, 15 Antitr. Bull. at 789–96.

138 Palestine Can Co. Ltd. Res. Prac. File No. 44, Controller's letter dated December 20, 1961.

139 Hypochlorite, supra n. 91.

140 Zincography, supra n. 92. The Minimum price schedule was accompanied by a reduction of credit to customers, these being the only two substantive points of the cartel agreement.

141 Shefer, supra n. 1, 15 Antitr. Bull. at 782, 786. For another Israeli view on the likelihood of monopoly conditions, as related to importation of technology suitable to very large scale, see Merhav, , Technological Dependence, Monopoly and Growth (Pergamon Press, 1969).Google Scholar For critiques of the unwarranted association of optimal scale with large scale in the U.S., see, e.g. Scherer, supra n. 131, at pp. 72–103; Bain, J., Industrial Organization (2nd ed., 1968)Google Scholar; Nelson, , Peck, & Kalachek, , Technology, Economic Growth and Public Policy (1968) 68–72.Google Scholar A recent report of the Ministry of Commerce and Industry stressed that there was room in Israel for both large and small firms, and that each should do what is appropriate for their scale of operations. The report anticipated that Israeli industry would develop with a relatively small number of large firms and a periphery of smaller enterprises. It saw high concentration as often inescapable and suggested a policy of encouraging merger, noting that oligopolistic structure tends to resist change and rationalization. Ministry report, supra n. 133 at pp. 39–41.

142 Shefer, supra n. 1, 15 Antitr. Bull. at 785; Jaffe, supra n. 1, 12 Antitr. Bull. at 946. Ministry report, supra n. 133, at p. 40.

143 See Israel Government Yearbook for 5732 (1971–72), 220 ff.; Ministry of Commerce & Industry, Programme for Development of Industry in Israel, Forecast B, 1965–1970, pp. 174–78.Google Scholar

144 E.g., P.I.T. Israel Canned Goods Producers Association, Ltd. Res. Prac. File No. 100, Decision July 5, 1962 (Canned Goods and Vegetables); Refiners Co. v. Controller of Restrictive Trade Practices Res. Prac. File No. 279, Decision February 12, 1970 (Wines and Liquors); participants included those in an earlier rejected cartel extending to the domestic market, Liquors, supra n. 88.

145 Eisenstadt, , Israeli Society (Weidenfeld & Nicolson, 1967) 82.Google Scholar

146 Facts about Israel 1972, (Keter, 1972) 92, 95.

147 Encouragement of Capital Investments Law (1959) 13 L.S.I. 258. See Israel Investment Authority, Israel Investors' Manual, 1971.Google Scholar In the five years 1966–70, $ 4 billion in capital came to Israel from foreign sources, of which only 5 per cent, or $ 200 million, was in the form of direct foreign investment in individual enterprises. Such direct investment is increasing substantially, however. The Jerusalem Post, May 28, 1972, p. 9.

148 (1959) 27 Divrei HaKnesset 2349, 2738.

149 Latest statistics, moreover, indicate a decline in the overall Histadrut share in industry to 16.4 per cent in 1971. For these 1971 figures, see The Jerusalem Post, March 16, 1972, p. 8 citing a survey by the Histadrut's Institute for Economic and Social Research, covering 1966–71. For earlier data, see Eisenstadt, supra n. 145 at p. 96; Halevi, and Klinov-Malul, , The Economic Development of Israel (Frederick A. Praeger, 1968) 113–15Google Scholar; Israel Central Bureau of Statistics, Industry and Craft Surveys 1967 (1971) 86–87.Google Scholar The Histadrut share overstates the extent of centralization, since it includes operations in competitive markets and cooperatives associated with the labour organization which are not subsidiaries in law or in fact, and operate essentially as independent enterprises. In 1960 about one-third of the industrial output reported in the Histadrut sector was in such independently-run entities. See Eisenstadt, supra at p. 96. Since that time, kibbutzim have entered light industry in a substantial way. Recent data from the Manufacturers' Association confirm a trend to a larger share of industrial output for private industry, although indicating only about 60 per cent in 1972. The Jerusalem Post, May 28, 1973, Annual Economic Supplement, p. 16.

150 See supra p. 444.

151 The Leyland contract with the Government provided that it would receive “exclusive import and foreign exchange facilities” and that the Government would not allocate foreign currency for importation of competitive trucks and buses during the term. Upon suit by an importer, the Israeli Supreme Court held that the Government had no authority to bind itself by contract with regard to future exercise of authority under the foreign currency or import licence laws and regulations. The Court, however, stated that because the Government had wide power under such laws and regulations, it could legitimately create a “monopoly de facto” by granting licences to a limited number, so long as this was supported by rational policy grounds. Such action could not be justified by reliance upon a prior contract. The Court construed the Leyland contract as not creating a binding obligation on the Government, and hence denied relief; but its decision in effect permitted the Government to carry out the concession. Y. Miller Engineering (Agency & Imports), Ltd. v. Minister of Transport (1962) 15 P.D. 1933.

152 Ha'aretz, February 24, 1972, pp. 10, 11.

153 (1957) 23 Divrei HaKnesset 319.

154 Jaffe, supra n. 1, 12 Antitr. Bull. at 945.

155 Goods and Services Control Order (Prohibition of Increase in Prices) 1973, K.T. 2951, p. 554 (January 1, 1973). See Jerusalem Post, December 4, 1972, p. 3; December 6, 1972, p. 7; December 7, 1972, p. 2; January 1, 1973, p. 1.

156 See, for example, the advocacy role of the U.S. Antitrust Division before independent regulatory agencies and in other intragovernmental activities in the United States. E.g., Turner, , “The Scope of Antitrust and other Economic Regulatory Policies” (1969) 82 Harv. L.R. 1207, 1231–43CrossRefGoogle Scholar; Baker, , “The Antitrust Division, Department of Justice: The Role of Competition in Regulated Industries” (1970) 11 Boston Coll. Ind. & Comm. L. R. 571, 578–93.Google Scholar

157 Lamps, supra n. 97, upon further proceedings on application for extension of approval in Res. Prac. File No. 256, Decision June 11, 1968. The Board rejected this venture of the Controller on the ground that the company's acquiescence in a tariff reduction was not an appropriate condition in the cartel proceeding. It noted, moreover, that the Government had full authority to decide on the tariff reduction without the acquiescence of the company (or the support of an advisory committee to which the acquiescence would have been submitted). The Controller also objected within the Government to the proposed issuance by the Minister of Justice of a regulation fixing a minimum fee schedule for lawyers.

158 In 1964, the Board was given authority to determine the validity of provisions in standard contracts utilized by suppliers of goods or services. A panel of three Board members sits for this purpose, and it considers whether the provision “is prejudicial to the customers or gives an unfair advantage to the supplier likely to prejudice the customers”. Standard Contracts Law (1964) 18 L.S.I. 51. See also Hecht, A., “The Israel Law of Standard Contracts” (1968) 3 Is.L.R. 586.Google Scholar A straw in the wind away from the structure of the Restrictive Trade Practices Law is the recent publication of a Government Bill on unfair trade practices. It would establish a new Controller of Trade Practices and an Advisory Committee to the Minister of Commerce and Industry. The Minister would have the authority to define unfair practices (in addition to those specified in the statute) after a proceeding before the Advisory Committee; the Controller would have various investigative and enforcement powers. Trade Practices Bill 1972, (1971/72) Hatza'ot Hok no. 991, p. 200, and see comment on the relation to the Restrictive Trade Practices Law at p. 202. The Bill is now pending before the Knesset Economic Committee, and suggestions have been advanced to combine the proposed authorities with those in existence under the antitrust statute.