Editor’s Note: Michal Halperin has been Director General of the Israel Competition Authority since March 2016. She has practiced law, specializing in antitrust, for 25 years, with law firms in both Israel and the United States, and served for four and a half years as Chief Legal Counsel and Deputy Director General at the Competition Authority. She was interviewed for the Antitrust Source on April 8, 2021, by Dina Kallay. Subsequent to the date of the interview, she announced that she would be leaving the Authority in August.
THE ANTITRUST SOURCE: Thank you for joining us to answer a few questions. With that, let’s go ahead. Maybe you can start by telling us a little bit about your professional background prior to becoming the General Director of the Israel Competition Authority.
MICHAL HALPERIN: Mostly untypically for the Israeli market, my career is characterized by jumping between the public sector and the private sector. I know it’s very common in the United States, but in Israel it is less common.
I started as a lawyer in the private sector. In 2002 I was nominated as the Chief Legal Counsel of the Antitrust Authority, and I was in that position for about four years. Then I left and started a practice of antitrust and competition in one of the leading law firms in Israel, now one of the leading practices in Israel. We worked very hard on initiating the practice and developing it, and I worked there for ten years. Then I was nominated as the Head of the Antitrust Authority, which is today the Competition Authority.
ANTITRUST SOURCE: Do you feel that private-sector background has helped you in your current role, and how so?
MICHAL HALPERIN: Yes, I do. Understanding the incentives of the private sector and understanding the way they analyze things and the way that they address issues, business issues and regulatory issues, is extremely important in order to be efficient and successful as a regulator. It gives me a deep background when I try to work vis-à-vis the business sector.
It doesn’t always work for the business sector, it sometimes works the other way around, because when you are experienced with the business sector you also know some of their faults, some of the things that you should be cautious of. So it works both ways, but all in all it is good to have business experience and to see things from different perspectives.
ANTITRUST SOURCE: In Washington we have a similar revolving door culture, and I think it works well for the agencies and for stakeholders.
MICHAL HALPERIN: I can tell you that in Israel we are less familiar with the revolving door culture. When I entered the office, the fact that I came from the private sector and represented some of the big monopolies in the Israeli economy drew a lot of suspicion from the public on how I would be able to serve the interest of the public and the interest of the Israeli competition. It’s not as familiar to us in Israel as it is in the U.S. culture.
ANTITRUST SOURCE: Let’s talk a little bit about international antitrust. Israel has been a pioneer in international antitrust, one of the 14 founding members of the International Competition Network (ICN) and has remained active ever since, definitely very well-known despite its size, and very active in the international antitrust work. Can you talk a little bit about your agency’s work in this space?
MICHAL HALPERIN: Yes, I can.
First of all, I do remember very well the initiation of the ICN. It took place exactly before I entered the Antitrust Authority for the first time when I became Chief Legal Counsel. I remember that it was very important for us that the ICN initiative would be successful and would be fruitful. We put quite a lot of energy into this initiative.
In the years that I left the Antitrust Authority there was a step back from this effort, and for several years the global effort and the international cooperation effort was less in the focus of the heads of the Antitrust Authority. I can understand that because you probably know very well there are always pressing local issues that take your attention and it is very difficult to dedicate the resources and the time and the patience to be also active in the global arena.
But when I came into office we put our global activity as one of the things that should be put on the short list of our first agenda, and we tried very much to promote the issue. For the first time, we initiated the position of a person who would be responsible for our international relations, and that’s Shira Gillat, who is sitting with me today. She is doing wonderful work at it. Since Shira Gillat came into office we have been able to deepen our relations with many competition authorities.
I am extremely pleased with the way that we are now positioning ourselves because, first of all, it became a day-to-day thing that we do have one-on-one consultations with other competition regulators and antitrust regulators. We get a lot of assistance from their experience and we try to give our experience also and to share our experience.
We have great relations and we have great cooperations with many, many competition and antitrust regulators, and all in all it works extremely well to benefit the depth of work of our Authority.
There is almost no issue today—unless it is a very routine issue—but with every new issue and first-time issue, we almost always look at what is going on globally to try to compare ourselves and see where we are standing. We put a lot of attention on it. It is very important for us to have this cooperation, to be able to give advice and to get advice, and to have open talk with other regulators, and we see it as one of our strengths today as an authority.
ANTITRUST SOURCE: I think Shira Gillat is a household name at the ICN.
MICHAL HALPERIN: Yes, and for good reason. She is working very hard and being more active, putting more contributions in, promoting panels and discussions. We benefit from it and we are very pleased also to share our experience with others.
ANTITRUST SOURCE: Let’s move a little to mergers. Maybe you can give us a little bit of a sense of what percentage of mergers that you look at in Israel go into a second phase, maybe whether you feel the thresholds are correctly placed right now, and, if you like, what international cooperation you have experienced when it comes to mergers.
MICHAL HALPERIN: There is a lot to talk about concerning mergers.
First of all, we don’t have in Israel a formal second phase like you do, but since I knew that this is one of the questions you wanted to ask me, I did look back.
What we do with our mergers is we categorize them according to a road light. “Green” mergers are the easy ones that we just approve within a few days. “Yellow” ones are the ones that raise questions but we don’t really feel that we will end up blocking the merger. The “red” ones, according to the road light, are the ones where we feel there are real issues and are at a real risk of being blocked. Some of them are at the end of the day approved, but they are at risk of being blocked.
I looked back at the data that we have, and between 3 and 6 percent of our mergers go through what you would call a “second phase” and we call “red mergers” that we review as mergers that are problematic and may be blocked.
A decade or so ago we received lot of international criticism on our thresholds. I don’t know if you remember, but we do not have only a revenue threshold; we have also market share thresholds. I know that the private sector does not like market share thresholds, and I understand why. I certainly understand their argument and why it is less favorable for them to have a market share threshold.
We had an internal big debate whether to omit the market share threshold when we discussed our major reform in the competition law, our antitrust reform, which I will probably talk about later on. We decided eventually not to do so and to hold on to our market share threshold.
When I look today at the international debate on merger thresholds that is taking place when you are talking about the digital platforms and the “killer acquisition” issues and stuff like that, I feel pretty relieved that we did keep our market share threshold because it does give us some confidence that for phenomena like killer acquisitions and acquisitions of startups that may be problematic, there is a good chance that we will be able to catch them in our net and at least review them. It doesn’t solve the problem of how to review these mergers, which is a different issue, and I’m not sure that the competition community has answers to yet, but at least we get the chance to have a look at these mergers. So I am pretty pleased with the thresholds.
I would add that during our reform of the competition law we raised the revenue threshold substantially. We raised it from NIS150 million per year to NIS360 million per year for revenues, so it more than doubled. To my disappointment, it didn’t bring a major decline in the amount of mergers that we received, so we still get a lot of mergers. Of course, when I raise this point, the economists in the Authority always tell me that I don’t know what would have happened if we had not raised the threshold, and they are of course right. But we didn’t see the effect that we expected when we raised the revenue threshold. So we do get a lot of mergers.
ANTITRUST SOURCE: Do you want to speak a little bit about international cooperation in merger cases?
MICHAL HALPERIN: Yes. 2020 may be the year that was most characterized by international cooperation in mergers. At least two cases come to my mind when I talk about international cooperation. Both cooperations were extremely beneficial for us and went well.
The first one was the merger between Taboola and Outbrain, which was reviewed by the Department of Justice (DOJ) and by the Competition and Markets Authority (CMA); even by Germany, but they quickly approved it; and by us. The DOJ, CMA, and we all benefited very much from the dialogue between us. It’s not that we always thought the same and analyzed things the same, but the fact that there was a sharing of opinions was very beneficial for all three authorities, and it’s a good example of cooperation. At the end of the day, the DOJ approved the merger and the CMA and the Israeli Competition Authority didn’t have the chance to finish their review and the transaction was withdrawn, but still, the cooperation went extremely well.
The other example that I have in mind was around the White Cement industry, where we had a merger that involved receiving the approval of the Spanish Competition Authority, and us. While each authority of course conducts its own independent analysis, a very intensive dialogue also took place in this merger between both competition authorities, with a lot of exchange of opinions and thoughts and conclusions. It was a good example of good dialogue when reviewing mergers.
There are many other cases where global mergers are being filed with us, and we just allow the bigger competition authorities or antitrust regulators to review them and wait for their decision because there is no specific Israeli perspective into them. The two cases that I mentioned did have an Israeli perspective into them and the dialogue was very beneficial.
ANTITRUST SOURCE: I think that is a good lead-in to talk about more aspects of the reform. We just talked about the merger aspect, and maybe you can talk a little bit about the significant antitrust reform that we’ve seen in Israel about two years ago. I think the ICA was behind a lot of that. Maybe you can tell us a little bit about that, what has changed and whether there are further changes that you hope would have happened that didn’t take place.
MICHAL HALPERIN: I would say that, first of all, as a background, we did pass through Parliament a very extensive reform to the Competition Act in Israel, the Economic Competition Act of Israel, which was called until then the Antitrust Act, or the Restrictive Trade Practices Act. The interesting thing about it is that the Parliament finalized the legislation of this reform on the last day of Parliament. Just a day after that the Parliament dissolved and we went into an election. I’m not sure how much you are involved in Israeli politics, but since then we have not had any Parliament in session. The reform was passed on January 1, 2019, and since then we have not really had any legislation activity in Parliament because we are only passing from one election to the other. We just now finished the fourth election in the course of two years. So we are under kind of a constitutional and political crisis.
For me it is a huge achievement that we were able to finish this legislation just before the Parliament dissolved because if we wouldn’t have, we wouldn’t pass the reform even until today. It was touch-and-go to be able to finalize this reform through Parliament.
I will tell you a little bit about what it involved. There were three major issues that we wanted to tackle in the reform.
The first one was that we wanted to lead a major step of deregulation, mainly that we wanted to decrease substantially the cases in which parties need to come to the Competition Authority and ask for their permission to do a transaction before they are doing it. We did a reform that we call the self-assessment reform, and we put the responsibility on the market itself. We said that the market should take responsibility for the legitimacy of the transactions and the parties of a transaction need to examine whether the transaction that they are doing harms competition. If it substantially harms competition, they should avoid doing the transaction. If it doesn’t harm competition, then they can go forward with it without asking us.
It’s really very much like the steps that took place in the European Commission many years ago, in 2004 if I remember correctly. We followed that, and we shifted the responsibility from the Antitrust Authority, the Competition Authority, to the private sector. This was a substantial stone in the reform.
Now, when you do such a reform you need to be able to enforce because the other side of deregulation is always being able to say, “If you will misuse the deregulation and you will do transactions that harm competition, we will come after you and we will enforce the law against you.” So the other thing that we did in this reform was to broaden our enforcement abilities. This took place mainly in two ways.
First of all, the criminal offense of cartels was characterized differently and in this framework became liable for up to five years of prison.
The second thing is that we broadened very much our ability to impose administrative fines on the private sector. Our power to do so was limited to NIS 24 million per case and we broadened it to NIS100 million per case. This was unprecedented. There is no other regulator in Israel that has such a broad authority to impose up to NIS100 million administrative fines. This was the counter thing to allowing the market to go under deregulation.
The third thing that we did through our reform was to introduce to the market the concept of market power. Monopolies were defined in the Israeli law according to market share. I think we were the last regime in the world where monopolies were defined only by market share. According to our law, every entity that holds more than 50 percent market share is a monopoly, and we wanted to introduce to the market the concept of market power. Thus, we added to the definition of monopolies, the concept of holding market power. Today each entity that either holds more than 50 percent market share or has substantial market power is considered a monopoly.
Here I will tell you that I wanted an even more aggressive reform. I wanted to avoid the market share threshold. I thought that the substantial market power definition was good enough and we don’t need anything more than that. But I was rejected by the public and by Parliament, so we got into this compromise where we had both.
But it is a good development for the Israeli market being able to analyze monopolies according to the definition of substantial market power and not only through the definition of market share. In fact, our published enforcement policy says that we will not impose any enforcement activity on monopolies unless we are able to show that they have market power.
ANTITRUST SOURCE: So it’s in line, I guess, with the global standard.
MICHAL HALPERIN: Yes.
ANTITRUST SOURCE: I’m curious, since you mentioned the administrative fines, have you had instances where you’ve had to impose one since this law was passed?
MICHAL HALPERIN: Oh yes. There aren’t many competition regulators or competition enforcers in the world that have both the authority to criminally indict and the authority to impose administrative sanctions. We have both, and I do believe that both tools are essential.
What happened until we got the authority to impose administrative fines, the major way to enforce was through criminal tools. As you know, criminal tools are not really good for enforcing against monopolies, against abuse of monopoly power, or against monopolization, or this kind of enforcement, and they are also not very good for enforcing against vertical restraints. Really, almost all of the time, in almost all of the cases, we use criminal tools in order to enforce against cartels and against bid rigging, which is a kind of cartel. Until we had the administrative fines, we concentrated a lot of our enforcement activity on cartel enforcement and bid rigging.
The issues like vertical restraints and issues like monopolization or abuse of power were pretty much neglected from an enforcement point of view. Once we were given the authority to impose administrative sanctions, a new route was opened for us to start dealing with the conduct of monopolies.
Since the reform, then we initiated six cases against monopolies in Israel for abuse of monopoly power. One of them was settled in a consent decree. Of the other five, one of them is still pending, but in the rest of them we imposed administrative fines. Needless to say, for all of them we received an appeal to the Competition Tribunal. An appeal was filed on our decision to impose administrative fines, and that’s fine. I mean we really welcome the review by the Competition Tribunal. It’s very positive.
Since we began this process of starting to enforce against monopolies, we already received two decisions from the Competition Tribunal that approved our decision on the abuse of dominance. The rest of the cases are still pending and we’ll see what will happen. Three are pending in court today.
ANTITRUST SOURCE: It sounds like it’s a tool you needed.
MICHAL HALPERIN: Absolutely. Having written decisions on cases where there was abuse of dominance has a lot of value for the business community because they understand how we look at what is a misuse of conduct and misuse of power. According to our decisions, they adapt themselves, and we see that many monopolies already digest decisions that we put in the last few years and changed their conduct. So that’s good.
ANTITRUST SOURCE: Let’s move to another hot topic, more of an international one. Earlier this year you issued a call for public comments on regulation of online platforms. Maybe you can tell us a little bit about the process, what kind of submissions you received, anything you want to tell us about this process.
MICHAL HALPERIN: This is one of the first steps that we are taking in the area of digital platforms and the digital economy. I will not say anything new if I will tell you that this is one of the pressing issues standing before competition authorities all over the world.
Once we finished this reform of 2019 that we finalized on January 1, we put a lot of attention on the digital platform issue and the digital market. We built within the Authority a team that is dedicating much of its time to this issue. They learned what is going on in the world. They learned the different and many reports that were filed in different jurisdictions on the issue of the digital market, whether it’s in the United States or in the United Kingdom or in Australia or in the European Commission. Many papers were written and they all were read by our team, and we learned a lot. We had thorough talks with the Israeli digital economy community, with many organizations that are active in this community in Israel, and we started to build for ourselves our policy in this situation.
Today we pretty much know where we are heading. We have a few policies that guide us that we even talked about publicly on how to treat the digital platforms and how to treat the challenges of the digital economy.
The first one is we are a small regulator. Compared to the U.S. regulators and compared to the European regulators, and even compared to the CMA or to the Australia Competition and Consumer Protection Commission, we are relatively small and our resources are limited. We need to be as effective as possible within the limited resources that we have for this matter. And, as always, we also have local matters and traditional industries to deal with, so we don’t have the privilege to deal only with the digital economy.
But we do think it will not be very effective for us to be the pioneer in initiating a new and innovative proceedings against big global platforms. Israel is a small economy, we are a small regulator, and I think we should learn from the experience of bigger regulators and bigger enforcement agencies.
We said several times that we do expect digital platforms, when they take upon themselves a way to conduct themselves in the United States and in Europe, we expect them to do the same also in Israel. One of the first examples where we applied this policy was in the Booking case. Booking had a most-favored nation restraint in its arrangements with hotels, and I know that these MFN arrangements were under scrutiny in Europe and settlements were reached in Europe with several competition agencies: Sweden, Italy, and France.
ANTITRUST SOURCE: Germany and the United Kingdom had a joint case.
MICHAL HALPERIN: Yes. Germany was the most demanding towards Booking. We didn’t go after Germany’s requirements, but we did look at what happened in Sweden, in Italy and France. They did reach an agreement with these agencies, and we approached Booking also. When we started to look into it, we approached Booking and told them that we can go into investigating the issue and start an enforcement case on the issue, but we suggested that we will copy what happened in Europe and settle on the same measure of conduct. We did reach a consent decree with Booking which we are very happy with. It is still pending in court. The consent decree should be approved by the court, and I hope it will be approved soon. But this is an example of how we applied our policy.
We also believe that if there are specific circumstances in Israel that need to be tackled, we do believe that we have the ability and the will to tackle the issue even if it is against global companies. Taboola/Outbrain was a merger that had specific issues with the Israeli market, and we tackled these specific local issues, although it was involving digital platforms.
Facebook is currently under investigation in Israel because it failed to file to us a list of a few acquisitions of Israeli companies that we believed should have been filed to us. It is an open investigation, we don’t know the outcome yet, but it is already public information that such an investigation is going on.
We do not feel the need to be the first one to initiate innovative proceedings, but we do insist that the digital platforms will conduct themselves in Israel according to what they took upon themselves in other jurisdictions and according to the local law.
I am somewhat concerned that the world is heading towards thorough legislation and regulation of the digital platforms. Europe published a few legislative initiatives. They are not complete yet, but they are legislative initiatives. Here Israel is in my opinion way behind. We have taken the initiative of publishing for public comments a platform-to-business relation paper as our first step to try and close the gap between us and Europe and us and the rest of the world when dealing with the regulation of digital platforms. Here Israel is not where it should be and we should go forward and start dealing with the issues that come with regulation of such platforms.
A second initiative that we have regarding digital platforms was done together with the privacy protection regulator and the consumer protection regulator. We put together a joint team, and the joint team published also a very important paper on the need to have a right for data portability, which we also think is very important from a competition perspective.
These are two legislative initiatives that we have just begun. Of course, as I said before, we don’t have Parliament working yet, so it will take time until it will be legislated. But I do feel that this is the first step heading in the right direction to close the gap between us and other jurisdictions around the world.
ANTITRUST SOURCE: Sure, especially in a jurisdiction that is very steeped in high-tech companies, right?
MICHAL HALPERIN: Exactly, and this is why the regulation of business-to-platform and platform-to-business is very important for us.
ANTITRUST SOURCE: When I started doing competition law—and I know when you did too—it used to be a somewhat esoteric area. Most people didn’t know what it was and didn’t especially care. It seems that in recent years there has been a growing interest among politicians—or even in the regular public, not the legal community or in the antitrust bar—in competition law or antitrust as an important part of the market and society. I’m curious if you are seeing the same in Israel and have any comments on that.
MICHAL HALPERIN: I completely share your amazement at the phenomenon. I have to tell you it’s pretty amazing how much interest the general public gives to competition issues. It’s not even the business community or it’s not even politicians; it’s really the general public. Almost every day we see headlines in the newspapers regarding competition issues.
When I came into office, there was a major issue of excessive pricing in which I wanted to change the policy of the Competition Authority and to withdraw from previous policy. I was pretty amazed at how much real public debate was going on about the issue of excessive pricing. It’s not like excessive pricing by monopolies is an issue that you would expect every person on the street will be interested in. There was a huge public debate around this issue, with a lot of writing and talking. I do believe that these issues raise a lot of awareness. The public is very interested. And yes, I share your feeling on this.
ANTITRUST SOURCE: Maybe we can talk a little bit about whether there are any unique challenges of competition enforcement and policy in Israel, and maybe build into that, if you’d like, some geopolitical changes that we are seeing with some opening of relations between Israel and Gulf countries, and whether you think that might change market dynamics.
MICHAL HALPERIN: First of all, I would say about the opening to the Arab world it is a huge step forward for the Israeli economy. It is a huge opportunity for the Israeli economy. We haven’t started to see the fruits of it yet, but in the coming years I’m pretty sure that we will.
We look at this period as a period of change, and it is an opportunity for the Israeli economy—not specifically from a competition perspective, but in view of the ability of Israel that until very recently, and even today, acts as an “island economy,” to start real commerce with the neighboring countries.
I do not see yet the specific competition perspective of it. I hope we will, but I don’t have any specific competition perspective to it. But there are indeed many challenges that the Israeli economy has.
If I need to point out the two major specific challenges that the Israeli economy has that are different than the global challenges—I mean the digital economy is a huge global challenge—but I can point out two specific Israeli challenges.
I would say that the first one is the financial sector. We have put a lot of effort in recent years to try to promote competition in the financial sector, with limited success, and here we need to put more attention on ways to promote real competition in banking, in insurance, in financing. All these areas are in my opinion neglected from a competition point of view. When talking about developing the Israeli economy, the financial sector is of course a major thing in this process. So we do need to have an innovative financial sector, a modern financial sector, and a competitive financial sector.
The financial regulators in Israel are extremely traditional and conservative. I don’t know if you are aware, but Israel almost didn’t suffer at all from the crisis in 2008. The big global crisis of 2008 kind of skipped Israel. The reason it skipped Israel was because the bank regulator was more conservative than what was common around the world and did not allow the banks to do things that it was common for banks to do around the world.
The success of being able to skip the crisis of 2008 only emphasized the conservative voices in the financial regulators, and we do have a very conservative financial regulation regime. This is an issue that slows down the ability of competition to evolve in the financial sector. This is one huge challenge that competition in the Israel economy has.
The second issue, which is a huge challenge for the Israeli economy, is a more general one and less sector-specific, and that is deregulation. The Israelis are in love with regulation. We have too much heavy bureaucracy and we have too much interference in the business conduct. When I came into office, I was very energetic about doing a lot of deregulation, and we were very successful in doing quite a few deregulation steps in the Competition Authority. One of them I told you about was the deregulation of transactions that needed ex ante approval from the Competition Authority. We took that off the table. That was only one of the steps that we did to deregulate the Competition Authority.
When I look into the Israeli public DNA, the Israelis are not willing to let go of regulation. They really believe that the regulator should take care of them and should keep them unharmed from anything that should happen ever. Every time that there is a crisis or a loss, there must always be, according to the Israeli public, a regulator that is responsible for us, and we see the headlines that “there is a regulator that fell asleep” and “the regulators didn’t react on time”—all this kind of talk. I believe that in the Israeli publicity there is not enough talk of how to handle risk instead of how to avoid risk.
If we want to be able to succeed in doing a real deregulation reform in the Israeli economy we need to understand that there will be cases of catastrophe and there will be cases of harm, and people may in some cases get injured. You cannot avoid it, but you need to go on and you need to go forward in order to be able to move forward with the economy.
ANTITRUST SOURCE: In the last several weeks, we have seen disturbing images from rocket exchanges between Gaza and Israel. Do you think your hopes for improved regional relationships will survive this turn of events?
MICHAL HALPERIN: The events of the last few weeks were extremely disturbing but not necessarily in aspects relating to our regional relations. I am much more concerned with gaps within the Israeli society which were intensified in the last year and in the last weeks. Specifically the gap between the ultra-orthodox population and the secular population and the gap between the Israeli Arabs and the Israeli Jews. The challenges to heal our society go far beyond competition issues although they are related directly to economic issues. I believe that once we start to correct our society from within, our neighbors will recognize the change in atmosphere and tone and improvement will be achieved with the Palestinians too.
ANTITRUST SOURCE: Probably the hidden hand of a competitive market is better than regulation.
MICHAL HALPERIN: Yes, in some cases. I do not deny that in some cases regulation is needed, but you would be amazed at what kinds of things the regulators are regulating here in Israel. In some cases and in some industries every step of the business is being regulated by the government. There is no sense to it.
We need to move to much more enforcement, much less ex ante regulation. But it involves taking risks. If you want to move from ex ante regulation to ex post enforcement, then risk is involved. The risk is that there will be a violation and harm that will be caused, and we will need to deal with it through enforcement, and no regulator will be liable for it.
ANTITRUST SOURCE: I have two more questions. One is about the ICA economist group. I think the ICA has a very impressive group of Ph.D. economists, and maybe you can talk a little bit about the economic work and maybe the interaction of economists and lawyers, which I know from other agencies is not always simple.
MICHAL HALPERIN: We have really a truly tremendous team of economists here in the Competition Authority. Compared to our size, the percentage of economists that work within the Authority is very high. A lot of the work that in other competition regulators is being done sometimes by lawyers, here it is being done by both lawyers and economists together.
One of the things I learned in recent years was that the best way forward is, instead of having an economic department and a legal department, we need to bring the economists and the lawyers to work together. I had a lot of internal debate within the Authority on this and not everyone agreed with me on this point, but I insisted that economists and lawyers will start working together on cases on day one—not at the end of the process there will be an opinion by an economist and opinion of the legal department and we’ll try to put them together—no. They will work together from day one. They will talk together with the private sector. They will design the data that they are requesting from the private sector together. They will look into the data that they get together. They will bring their perspectives into the case from day one and they will work together.
We built the Markets Department, which was a new department within the Competition Authority that was initiated at the end of 2018. In this department we have joint teams of attorneys and economists working together. There was a lot of concern and questions about it when we initiated this department. Looking now, two-and-a-half-years later at this process, I am very pleased with it. It brought in a much better product. It brought in a unique dialogue between the attorneys and the economists. It brought in a mutual thought with many dimensions to it. I am very proud of this process. Yes, I am very pleased with it. That’s the way to go forward.
ANTITRUST SOURCE: I think a lot of agencies are struggling with how to streamline the joint work of the attorneys and the economists in their different ways. That sounds like a good one.
MICHAL HALPERIN: It is a very unique experience what we did here. It is even unique within the Israeli government. I am not aware of any other place within the Israeli government where attorneys are working together with economists under a joint supervision. It’s unique.
I have to tell you also there was a lot of debate and a lot of concern, but also a lot of cooperation from the professional team on it, and a lot of will to make the effort for it to succeed. Without the cooperation of really, really excellent economists and attorneys who were willing to give it a chance and who tried to make it work, it wouldn’t have succeeded.
ANTITRUST SOURCE: Perhaps we should finish up with any other ICA achievements under your term, or really anything else you would like to add.
MICHAL HALPERIN: I am already five years in office, and looking back there are a few sectors in which we were able to really improve competition, which I am very proud about. I can mention a few.
One of them is the telecommunications sector. I don’t know if you know, but cellular phones in Israel are the cheapest in the world. It is a very successful competitive sector. The multi-TV-channel market is a market where we put a lot of competition. The cement market is a market where a few years ago there was a monopoly and now we are having a lot of competition.
There are many other examples where we were able to really promote a lot of competition and introduce a lot of competition into the market. We see really sometimes a fall in prices, sometimes a much bigger variety, sometimes much better service. The public is enjoying in many sectors better products. That is of course one perspective of it.
What I would like generally more to talk about is the effort that we made in recent years to promote our advocacy work. One of the things that I put as a challenge when I came into office was to make the Israeli Competition Authority the government counsel for competition issues. We put a lot of effort into learning how to do advocacy, how to do it well. For a regulator, for an agency that is used to dealing with merger review and with enforcement, it is very different to do advocacy work. When you are doing enforcement or when you are doing merger review work, you are a vital player, you decide. You have the court at the end of the day to look at things, but you are on the side that you have the power.
When you come to advocate, you need to convince. You don’t really have power. You need to convince the government or the different government agencies that they need to listen to you, and in some cases even need to change their decision or to put other issues into the place in order to adapt themselves to competition.
It is totally different work to do advocacy than to do enforcement, and we put a lot of resources into learning how to do it. We even got a lot of assistance from other agencies around the world. For example, the CMA helped us a lot to learn how to do good advocacy, and the FTC and the DOJ also made a lot of effort on this arena. We got a lot of advice.
We used the consultations from outside and we built a team that has expertise in advocacy. We really were able to build ourselves as an authority that has something to say about almost every economic issue that comes up in the government. There are some economic issues that do not concern competition, but every reform in the Israeli economy is discussed with us, every privatization process is discussed with us, and many other smaller and more modest steps are discussed with us.
The ICA advises the government on many issues. In 2020 we counted more than 130 cases in which we counseled different governmental agencies on competition issues. And I do remind you that 2020 was a year with no Parliament. Usually, we go to Parliament also and counsel members of Parliament, but we didn’t have any legislation, so this arena was neglected because there was no Parliament, but still, we were involved in 130 counseling cases on different issues.
I am very proud to say that today in 2021 a major part of the effort of the Competition Authority in Israel is not only to maintain competition but also to promote competition through counseling the government on steps that it can do in order to allow competition to enter, promote competition, etc. This is a very important issue for me and I wanted to emphasize it.
The other point that I wanted to emphasize is criminal enforcement. Israel is extremely unique here. It is only second to the United States in its ability to indict criminal competition offenses.
In the last few years we had some very important and very successful cases of indictment and we started to see punishments that we feel are the right threshold of punishment for an antitrust violation, for cartel offenses.
I would mention that there were in the last two years, three or four cases in which executives were sent to prison in criminal cases. That is a huge step forward for criminal enforcement of antitrust, of cartels in Israel.
We are very proud about it. We put a lot of effort in our Investigation Department on making it modern, effective, and innovative, and we wanted to be able to investigate the very, very complex offenses of antitrust.
We also have a very big legal team here to indict such cases within the Authority. They were very successful in recent years. We are also very proud of our ability to bring successful good cases and successes in the criminal aspects of antitrust enforcement.
One last word needs to go to the excellent team of the Competition Authority. The Competition Authority is a unique unit in the Israeli Government. Not only because it is politically not influenced but because it was able to maintain a great team of dedicated hard working professionals, who come each morning to work with a sense of duty to serve the public. It is an honor for me to head the Authority’s team and to work with them.
ANTITRUST SOURCE: Thank you very much for speaking with us today.
MICHAL HALPERIN: It was a pleasure. Thank you very much for taking the time to talk with us and to give the Israeli Competition Authority the platform to represent itself. I am very appreciative of your initiative to do this interview.
