Promotion of Competition in the Food Sector Law (Amendment No. 8 and Temporary Provision) Bill

What does the bill do?

For this purpose, a retailer is defined in the law as a person who holds a store as well as any person connected to them, while a supplier is defined in the law as someone who supplies to a retailer, or through a retailer, directly or through a distributor, goods, including private-label goods, as well as any person connected to them. Chapter B of the law, which deals with regulating the activity of suppliers and retailers, currently applies only to food retail chains, and sets, among other things, heightened duties that will apply to large retailers and large suppliers, defined in the law according to their sales volume (as of 2024, a sales turnover of about NIS 333 million for a large supplier, and a sales turnover of about NIS 277 million for a large retailer). This chapter has two parts: Article A, which sets prohibitions and restrictions that apply to retailer–supplier relations, including a prohibition on suppliers and retailers interfering with each other regarding the retailer's arrangements with another supplier or the supplier's arrangements with another retailer, a prohibition on large suppliers interfering with the arrangement of goods in the stores of large retailers, and prohibitions regarding pricing and giving discounts; Article B regulates geographic competition between large retailers, and mainly sets the duty of a large retailer, under certain conditions as detailed in the law, to apply to the Competition Commissioner if it wishes to open a new store in an area where it already operates. Because of the limited number of drugstore retailers and given that there is no full competition in this sector, the Promotion of Competition in the Food Sector Law (Amendment No. 8 and Temporary Provision), 2024 (hereinafter – Amendment No. 8) established that the provisions of Chapter B of the principal law will also apply to the large drugstore chains. Accordingly, Amendment No. 8 established that a "drugstore" will be defined as a store in which toiletries, cosmetics and more are regularly sold, and in which more than a quarter of the sales turnover is from the sale of those products. In addition, it established that a "large drugstore retailer" will be defined as a drugstore retailer whose sales turnover in its drugstores exceeds an amount that currently stands at about NIS 277 million, which, as noted, is the amount currently set for the large food chains. It was further established that following the application of Chapter B to the drugstore sector, the name of the principal law will be changed to the "Law for the Promotion of Competition in the Food and Drugstore Sectors". Under the amendment, the prohibitions and restrictions set in Article A of Chapter B will also apply, with the necessary changes, to a drugstore, to a drugstore product, to a large drugstore retailer and to a large supplier when contracting with a large drugstore retailer. That is, all the same prohibitions that apply to the food chains will also apply to the large drugstore chains. With regard to Article B of Chapter B, which, as noted, deals with regulating geographic competition between large retailers, the article's provisions were not applied as they are to the drugstore sector, and in their place new provisions were set regarding the opening of an additional drugstore by a large drugstore retailer, if it is located in a shopping center. These provisions were set only with regard to opening an additional drugstore in a shopping center, including a mall, whose total commercial space exceeds 3,000 square meters. A store will be considered an "additional store" if the large drugstore retailer has a drugstore within a certain distance from the same shopping center in which it seeks to open the drugstore. It was further established that for a large local authority, which will be defined as a local authority whose number of residents registered in the Population Registry exceeds 200,000, the distance between the existing store and the shopping center in which a large drugstore retailer seeks to open an additional drugstore will be up to one kilometer, while for a small local authority, which is a local authority that is not a large local authority as stated, the distance between the existing store and the shopping center in which such a retailer seeks to open an additional drugstore will be up to two kilometers. The duty that will be imposed on a large drugstore retailer that meets the above conditions is to conduct a "self-assessment" regarding the possibility that opening the drugstore in the shopping center will harm competition, and only if there is no such concern may it open the store. That is, the drugstore retailer will be required to conduct all the economic and legal checks itself to make sure that opening a store will not raise a concern of harm to competition. However, since this is a new provision, and in order to increase certainty among drugstore retailers, the arrangement was set as a temporary provision under which, for a period of five years from the day of publication of Amendment No. 8, a large drugstore retailer seeking to open such a store will be required to apply to the Competition Commissioner with a request to receive approval to open the store. The commissioner will be authorized to object to the request to open a store or to make it subject to conditions, if in the commissioner's opinion there is a reasonable concern that opening the store will harm competition. About half a year before the end of the temporary provision, the Competition Authority will be required to publish an "opinion" regarding the implementation of the duty that will apply to a large drugstore retailer to conduct that self-assessment.