On 11 January 2022, the High Court of Justice rejected a petition filed against the Israeli Competition Authority (the “ICA”) by 10Bis.co.il Ltd., an Israeli subsidiary of Just Eat, (“10Bis”).
The petition concerned a “request for information” that the ICA issued under Section 46(b) of the Economic Competition Law, 5748–1988 (the “Competition Law“). The ICA demanded 10Bis to disclose, inter alia: (i) minutes of board meetings held by the Dutch parent company (Just Eat); and (ii) instant messages and “WhatsApp” messages sent by represetatives of 10Bis. 10Bis alleged that the ICA’s demand was ultra vires.
The petition was dismissed in limine on procedural grounds. The Court pointed out that 10Bis did not raise before the ICA its argument that the power to seek information under Section 46(b) of the Competition Law does not extend to the documents of the foreign parent entity.
The Court further stated that 10Bis already provided the ICA with certain instant messages, the request of which it later contested.
The Court also stated that 10Bis did not exhaust the administrative proceedings before taking the matter to court and did not offer any alternatives, other than refusing to comply with the request.
Due to these procedural reasons, the petition was dismissed without any substantive analysis of the important legal questions that it may raise.
While the discussion about the ICA’s power to issue RFIs to foreign entities (and to obtain instant messages) was left undecided, the Court did uphold the ICA’s demand to obtain from the local subsidiary minutes of the foreign parent entity’s board meetings, which were in possession of the local subsidiary or could be obtained by reasonable means.
Note, however, the circumstances of the matter: the local subsidiary did not keep minutes of its own board meetings, which absence seem to have influenced the Court’s decision to uphold the ICA’s demand to disclose minutes of the parent company’s board meetings.
The main takeaways for foreign entities operating in Israel through a local subsidiary are, in our view, as follows:
- Parent entities’ documents that are held by the local subsidiary (including minutes of board meetings, presentations etc.), may be subject to disclosure upon demand of the ICA and should be treated accordingly (special consideration should be given to privileged documents that the parent entity would like to share with the local subsidiary).
- Documents are not entirely shielded from disclosure even if not held locally, and it would be advisable for the local subsidiary to keep orderly minutes of its own board meetings.
- It should be assumed that the ICA’s powers to demand disclosure of documents also extend to instant messages and “WhatsApp” messages. The ICA is increasingly demanding to receive such messages in the framework of administrative RFIs.
- Any claim that the ICA does not have authority to seek certain documents or to extend RFIs directly to foreign entities should be expressed explicitly and at the first opportunity and prior to disclosure.
- Before seeking judicial relief, it is advisable to conduct an exhaustive and documented process of negotiations with the ICA, which will include alternative proposals to the ICA’s initial RFI.
- The fact that the Court upheld the ICA’s RFI will likely encourage the ICA to continue issuing extensive data requests and to expand its reach to foreign companies.
