Dear Clients,
The Supreme Court recently issued a judgment in LCA 32981-11-25 Afiqim Mayim Ltd. v. The Consumer Protection and Fair Trade Authority (June 10, 2026) (the "Afiqim Mayim Matter" or the "Judgment"), establishing a new rule on whether conduct that breaches the Consumer Protection Law constitutes a single violation, or a series of separate violations against multiple consumers, for the purpose of imposing a financial sanction under Section 22C of the Consumer Protection Law, 5741-1981 (the "Consumer Protection Law").
In brief, the Supreme Court set out, for the first time, the rules for determining whether a breach of a Consumer Protection Law provision warrants one sanction for the breach itself, or multiple sanctions by reference to the number of consumers harmed. As a general rule, the Court held that a violation directed at the consumer public as a whole, which does not materialize into a monetary loss for an individual consumer, will warrant one sanction; by contrast, a violation directed at a specific consumer will warrant sanctions according to the number of consumers harmed.
This update briefly reviews the background to the case, explains the rule laid down by the Supreme Court, and discusses its implications. We then address the power of the Consumer Protection and Fair Trade Authority (the "Authority") to impose financial sanctions under Section 22C of the Consumer Protection Law.
Finally, we outline the possible implications that this rule may, in our view, have for consumer class actions and for class action proceedings more generally.
Background
The Financial Sanction Imposed by the Authority
On June 7, 2023, the Authority notified Afiqim Mayim Ltd. (the "Company") that it intended to impose a financial sanction of approximately NIS 3.5 million for breaches of the Consumer Protection Law in relation to thirteen different customers, following complaints received by the Authority in 2019–2020. The Company was alleged to have committed different statutory breaches with respect to each customer, and the Authority determined that a separate financial sanction should be imposed for each violation.
The sanction was reduced by 20% due to the absence of prior violations, and was later reduced again following arguments raised by the Company, particularly in relation to the correction of the violations. At the end of the administrative review process, the sanction was set, on March 4, 2024, at NIS 2,451,528.
Proceedings Before the Lower Courts
The Company appealed the decision to impose the sanction, arguing that it amounted to double punishment. According to the Company, one act on its part gave rise to several violations, and sanctions should therefore be imposed by reference to the number of acts, rather than the number of violations resulting from that same act. The Magistrates’ Court dismissed the appeal, holding, among other things, that a sanction may be imposed for each violation committed against each customer, even where those violations arose from a single act. The court nevertheless noted that the Authority should adopt an orderly, clear and public procedure for counting violations.
The Company’s appeal to the District Court was accepted in part. For present purposes, the District Court left in place the ruling that separate sanctions may be imposed for the same act where it was carried out with respect to different customers, and therefore gave rise to different violations. The District Court did so without detailed reasoning. The Company then filed an application for leave to appeal that ruling to the Supreme Court.
For completeness, prior to the Judgment, the case law on this issue was divided. In some cases, the courts adopted a narrower approach, treating identical breaches committed against several consumers as a single violation arising from the same prohibited act. In other cases, the courts adopted a broader approach, permitting the imposition of financial sanctions for each violation, and in relation to each customer separately.
The Supreme Court’s Ruling
The Supreme Court addressed, for the first time, the question whether conduct that breaches the Consumer Protection Law constitutes a single violation carrying one sanction, or a series of separate violations against separate consumers, such that the Authority may impose a financial sanction for each violation and not only for the conduct as a whole. Put differently, the question was whether the conduct should be examined from the Company’s perspective, or by reference to its consequences from the consumer’s perspective.
Justice Stein applied the "act test", under which the court examines whether the business’s conduct amounts to one act or to several distinct acts. For that purpose, Justice Stein referred to two auxiliary tests:
- The formal test — whether the business’s conduct is one indivisible physical act, or a sequence of acts capable of being separated.
- The "moral" test — whether, in light of the nature of the harm caused by the specific violation, the protected interests, and deterrence considerations, the conduct should be treated as several separate violations.
Alongside these auxiliary tests, Justice Stein noted that even where the conduct consists of one indivisible physical act, if consumers suffered a monetary loss, the conduct will be treated as multiple violations, corresponding to the number of consumers who suffered that loss.
Justice Kanfi-Steinitz concurred in the result reached by Justice Stein, but disagreed with his reasoning. She proposed a test based on somewhat different parameters, dividing violations into two categories:
- Object-based violation — a violation that affects the consumer public as a whole, but does not cause a monetary loss to an individual consumer, will constitute one violation (e.g., failure to label goods, failure to display a total price, and misleading advertising).
- Person-based violation — a violation directed at a specific consumer, the number of which is counted according to the number of consumers harmed (e.g., charging cancellation fees or failing to refund consideration).
Justice Kanfi-Steinitz further held that, under Section 22C of the Consumer Protection Law, once the number of violations committed by the business has been determined, the Authority must determine the amount of the financial sanction to be imposed for those violations. This serves as the response to the concern that businesses could otherwise be exposed to uncontrolled sanctions.
Justice Mintz agreed with the result reached by the other two Justices, but did not consider it necessary to decide between their approaches — namely, which test should apply — because, in his view, the tests are in practice the same.
The Judgment also held that the Authority should promptly adopt an orderly, clear and public procedure addressing how violations are to be counted, in light of the Judgment.
Implications of the Judgment
The Judgment was issued only a few days ago. It remains to be seen how the various courts will interpret the Supreme Court’s ruling, and which test they will apply when considering how violations should be counted.
We will also monitor the Authority’s publications and provide an update once it adopts the procedure for counting violations, as the Justices recommended — to put it mildly — that it should do.
The bottom line is that the common ground between the Justices’ positions, and the rule that may be derived from the Judgment, is that the decisive question is not only whether a violation occurred, but also its nature: a general violation that does not result in specific monetary harm will tend to be treated as one violation, whereas a violation that causes monetary loss to specific consumers will tend to be counted as multiple violations according to the number of persons harmed.
The Authority’s Power to Impose Financial Sanctions under Section 22C of the Consumer Protection Law
Section 22C of the Consumer Protection Law grants the Commissioner of Consumer Protection and Fair Trade (the "Commissioner") broad administrative authority to impose financial sanctions on businesses that violate the provisions of the Law specified in Section 22C. As illustrated above in the Afiqim Mayim Matter, these sanctions may accumulate to a significant amount.
Calculating the Sanction Amount for Each Violation
Under Section 22C of the Law, the Commissioner may impose a financial sanction for each violation of the provisions listed in that section. The base amount varies depending on whether the business is a corporation or an individual, and according to the relevant subsection, as set out in the table below:
| Corporation | Individual | |
|---|---|---|
| Violation of Section 22C(a) | NIS 25,590 | NIS 8,260 |
| Violation of Section 22C(b) | NIS 53,070 | NIS 29,490 |
| Violation of Section 22C(b1) | NIS 75,620 | NIS 42,030 |
This is a base amount, which may be increased or reduced, as detailed below:
- Under Section 22D of the Consumer Protection Law, where the Commissioner has reasonable grounds to believe that a business violated one of the provisions of Section 22C under aggravating circumstances, a financial sanction of 1.5 times the base amount may be imposed.
- Pursuant to Section 22H(b), the Consumer Protection Regulations (Reduction of Financial Sanction Amounts), 5775-2014 (the "Reduction Regulations") were promulgated. The Reduction Regulations prescribe various circumstances in which the Commissioner has discretion to reduce the base sanction amount, at rates that vary from case to case.
Imposing a Sanction: The Two-Stage Analysis
As noted above, Justice Kanfi-Steinitz proposed a two-stage analysis that separates the counting of violations from the determination of the sanction amount. At the first stage, the number of violations is determined factually and objectively, according to the nature of the violation and subject to the tests described above.
At the second stage, the final sanction amount is determined. This is the stage at which the Commissioner must exercise administrative discretion as to whether to increase the financial sanction due to aggravating circumstances, or reduce it in accordance with the Reduction Regulations.
Possible Implications for Class Actions
It should be emphasized at the outset that the Judgment in the Afiqim Mayim Matter, and Section 22C of the Consumer Protection Law, concern the Commissioner’s administrative authority to impose a financial sanction on a business for breaches of the Consumer Protection Law.
Nevertheless, it may be possible to apply the tests established by the Justices to other proceedings by analogy, particularly class action proceedings.
In class actions, the class representative is required to act for, and represent, the interests of the class. The rationale underlying the class action mechanism is to address the lack of incentive for consumers to sue businesses for low-value claims.
Over the years, however, there has been increasing criticism of the cynical use of the class action mechanism in connection with various alleged violations, including violations of the Consumer Protection Law. This criticism has been voiced by public officials, in judgments, and by various professional stakeholders.
A prominent recent example is the motion to certify a class action filed against the "Beit HaPancake" chain. As reported in the media, the motion alleges, among other things, that the chain misled customers into believing that they were being served natural maple syrup, when in practice they were served artificial maple-flavored syrup. The alleged damage caused to the class members in that case was estimated at more than NIS 2.5 million.
For completeness, a bill amending the Class Actions Law is currently being prepared for its second and third readings in discussions before a joint committee of the Constitution, Law and Justice Committee and the Economic Affairs Committee. Among other things, the bill is intended to address the criticism described above.
In light of the above, it may be possible to rely on the Afiqim Mayim rule also in class actions concerning violations directed at the consumer public as a whole that do not cause a monetary loss to each individual consumer. For example, in light of that rule, there may be no basis to pursue a class action for failure to label goods in accordance with Section 17 of the Consumer Protection Law, since this is a single violation, unlike violations that cause a monetary loss to each individual consumer, such as class actions concerning the weighing of product packaging.
Needless to say, the foregoing is only a hypothesis. This argument has not yet been raised before the courts and, naturally, has not been addressed in any judgments.
This publication is provided as a general service to the firm’s clients and friends and does not constitute a substitute for specific legal advice. We do not recommend acting on the information set out above without obtaining legal advice from qualified professionals, based on the specific facts and circumstances of each case.
