The first draft is called, "an opinion on transferring information as part of due diligence of a deal between competitors," in which the regulator sees danger when one company conducts talks with a competitor in order to acquire it, as part of which, it receives information that helps it compete with that same rival, if the deal does not go through. The dangers created are the basis for coordinating business conduct and the existence of a mechanism for transferring information that would serve as a "filtering effect" for competition. High-tech companies need to fear that they are dealing with ostensible negotiations when in fact it is commercial spying on a competitor.

The regulator attempts to instruct on what is sensitive information from the point of view of competition and all information that is not public, and if found by any competitor owning information, it buys him the means to view the developments of the owner of the information and its market response - a matter that might create a competitive advantage for him. Among the materials detailed by the regulator there can be found prices, production costs, discounts, profit margins, market shares, strategy, R&D, tenders and their policies etc.

The regulator suggests that sensitive information such as this can be checked by a professional and objective third party that has no conflict of interests. As a second preference it is possible to be assisted by employees who are not involved in pricing, marketing or sales activities or are about to retire. Alternatively, the antitrust regulator proposes setting up a "clean team" within the company that will assist in decision making and looking over material and who for a subsequent protracted period will not be involved in pricing, marketing and sales for the company.

The regulator sets a number of additional means to minimize the risk to harming competitiveness including the obligation for extensive documentation, transferring information as a 'bottom line,' signing guarantors on a wide ranging letter of secrecy etc.

We think that the opinion is not sharp or clear enough. The definition of "competitors" and the "obligation to document" are too broad, the definition of the documents that it is permissible to transfer are not concrete and a detailed list is required of which documents can be transferred for direct viewing. Restrictions on those allowed to directly see too much information could create a problem in accepted commercial life, in which it is reasonable when the potential buyer is engaged in the same field as the target company, and decision makers on the buyer company's management are interested to take a decision and offer a price based on information of a third party recommendation. We think that there is no place to enforce this on private companies and businesses that are not required to submit a merger announcement or reveal overall public information. Another draft opinion involves the prohibition of a monopoly owner charging excessive prices on an asset or service. The aim of the regulator is to cope with the problem of the cost of living In Israel due to the fact that a substantial part of basic products in the country are monopolistic products. Thus the regulator breathes new life into the existing clause in Israel's Antitrust Law which does not exist in the US law.

The regulator explains in the draft three methodologies by which he intends to ascertain whether a monopoly is charging an excessive price. According to the first methodology, the final price of the product will be examined against the costs of producing it. The second methodology will analyze the profitability of the monopoly's owner given on a relative index that will be set by the regulator. The third methodology suggests that similar products and companies should be compared regarding price.

The regulator brings an open list of considerations that will provide incentives for it to enforce the prohibition including checking the status of the monopoly that is not through its competitive advantages, an additional regulator in the field, excessive prices on basic products and more. Although, criticism from the companies has not been slow in coming. In effect, all monopoly owners are now required to examine their prices through an economic expert who will apply each of the three methodologies and will reach a decision on whether the company should be subject to sanctions from the regulator.

To our mind, the result of the draft opinion is not an increased number of admissions but rather increased opacity. Monopoly owners do not understand do not know how to examine if their prices are excessive. At first sight according to the opinion the answer to this is take an economic expert that will examine the price according to various methodologies and then make a recommendation to you. It is self-evident that this is a burdensome and difficult result to implement. Regarding any economic opinion, the regulator (or any interested competitor) can present a counter economic opinion that will specify different numbers. Not only that but customers will pay heavy expenses in terms of time and money and the results would be a continued refusal to admit anything.

This and more there is a doubt if an opinion will cause monopoly owners to lower the price of products and all of us will pay less for many of the basic consumer products that we use. It is possible that some monopoly owners will prefer to continue charging consumers excessive prices, and be hit by sanctions mainly economic that would be imposed on them by the Antitrust Authority, however much it levies. A draft opinion was also recently published that discusses the activities of business associations and their members.

The rules set out by the regulator in this draft will cause significant economic costs and of necessity close legal support. A business association is not a rich economic body. In these circumstances, it seems to me that it will not be easy to divide the business association in such a way that that it will meet the criteria set out by the regulator from the professional point of view of the association's efficiency, and from the economic point of view. The opinion does not help business associations and in fact delays and raises difficult problems for their activities while providing legitimization for filing indictments against them and against their members for every act that in the opinion of the regulator is not consistent with his aforementioned opinion.

Another recent publication by the regulator involved a new type of exemption that is not horizontal and that do not contain price restraints. This type of exemption includes a number of innovations.

The definition of the term "horizontal arrangement" in this type of exemption sets that investment of a competitor in another rival that is not more than 25% of the rights acquired in the company, will be examined as a restraining arrangement, and this is distinct from an acquisition of more than 25% of the rights which will be examined as a merger of companies. So far there has been a dispute regarding the kind of handling of the investment of the competitor in its rival in the form of an acquisition of rights of less than 25% although the ruling has not yet been decided. The regulator is now making it clear through the definition of the term "horizontal arrangement" and the exemption of this type, that the examination of this kind of investment will be made by checking the parties connected with it in the horizontal restraining arrangements.

Another change is an attempt to adopt the broad approach in the United State and in Europe on the matter of setting maximum prices to the seller. So far the custom in Israel has been that setting maximum prices has verged on a prohibited restraining arrangement, save for exceptions 9see for example clause 3(4) H to the antitrust rules (an exemption of the type for exclusive distribution agreements 2001), and this is in contrast to the broad position in the United States and in Europe where dictating the price to the seller and setting minimum prices is seen as a restraining arrangement while setting maximum prices is permitted. Defining the term "price restraint" attempts to adjust the Israeli debate to the situation acceptable in parallel legal systems.

These aforementioned changes might be useful and effective but in our opinion they will be a fly in the ointment. The need to implement the exemption will require the parties to the arrangement to check for the existence of the conditions for clause 2 to the exemption (as previously described) so that in any case they will not escape from a deep legal and economic analysis for the purpose of examining the possibility of using the exemption and certainly when they are not sure regarding their talks.

To sum up, these four drafts have stirred up a storm among some lawyers, and not without reason, due to placing restrictions and restraints representing "a regulation that the public cannot withstand." When the final versions of the opinions will be published, we will be able to examine if the regulator has paid attention to the remarks that have been received from the public and from companies and balance out between the need to protect competition and the danger of suspending it.