Competition Authority to the Tribunal: The arrangement between the ISA and the Masab must not be approved


Competition Authority Responds to the claims of the public company that comes that provides the platform for making credit card transactions in the economy, and claims in relation to the cooperation between the ISA and the MSB that “the restrictive arrangement is not in the public interest and should not be approved.” This was claimed in the response that the Authority submitted to the Competition Court about four and a half months after the ISA and Masab approached the Competition Court against the Authority’s position and requested approval of the continued cooperation between them as it has been “regulated in practice for 35 years. And the membership documents, “dating back to the days when the two companies were controlled by the banks – in 2019 the ISA was taken out of the banks’ control and completed its transformation into a public company without a controlling interest.

ISA andbearing Both are managed by Moshe Wolf. During the month of May this year, and following and against the position of the Competition Authority as expressed even then, they applied to the Competition Court to approve the arrangement between them for a period of 10 years. In this context, they argued that “the assets subject to the arrangement as described in the application are reciprocal services provided by one company to its doctrine, and services that the companies share, including a joint CEO and staff; Technological infrastructures and shared backup facilities; “Communication services, information security, internal auditing, human resources, insurance and joint risk management and joint work teams, including software development and maintenance teams, infrastructure maintenance, servers, information security, communications, telephony and more.”

In the same move, the ISA and Masab shared “that the cooperation between them is a restrictive arrangement in the present and as long as the company’s future activities are a competitive injury, it is only an indirect injury since potential competition exists at most between the companies’ customers”, when they insisted on the operational benefits Between them.

As stated, now the competition commissioner Michal Halperin She submitted her position to the court, which as expected is the opposite. “The cooperation as presented between Masab and Sheba is a restrictive arrangement that is not in the public interest and should not be approved,” the authority claims. According to her, “the cooperation and joint conduct of the ISA and the Masab, in the form requested in the application for approval, raises real competitive concerns. The restrictive arrangement. “

The Competition Authority also claims that the competition between ISA and Masab already exists and is expected to continue to intensify on several levels, including: competition for the development of new infrastructure in the field of payment systems; competition with payment service providers such as payment applications that can choose to offer their services A. The benefits and certainly have not proved that it is in the public interest to outweigh the competitive damage that the restrictive arrangement may cause. “

The competition network rightly explains that “ISA and Masab are the two main infrastructures that are at the core of Israel’s payment system,” adding that “the cooperation between them has a direct and dramatic impact on the fate of the payments sector in Israel.” It should be noted that the ISA enables the operation of credit cards and the interbank clearing.

The Authority notes that “following the implementation of the Shtrum Committee’s conclusions, the banks were required to reduce their holdings in the ISA and currently four banks hold less than 40% of the ISA. Despite this change in the ISA’s control structure, On the eve of the change in the holding structure of the ISA, including joint management, joint offices, joint staff and joint infrastructure. Against this background, the Competition Authority contacted the ISA and the ISA in October 2019 and informed them that further joint conduct might increase. “It is a violation of the law. It is this appeal that gave rise to the request of the ISA and Masab for the competition court to approve the existing restrictive arrangement between them.”

It should also be noted that according to the ISA’s reports, “as of 2002, the ISA’s activity is regulated by exemptions from the restrictive arrangement granted by the competition commissioner” when “in September 2017 a new exemption was received from the commissioner for five years until September 2022” in the ISA Specifications That the said exemption “came in lieu of the previous exemption, and was concerned with the joint ownership arrangement of the banks.”

Incidentally, according to ISA reports, in June 2020 a decision was given regarding an exemption from the conditions of a restrictive arrangement in the case of Masab for a period of 5 years. The decision of the exemption of Masab.

In any case, this is no small matter for the ISA, which is traded on the stock exchange at a value of about NIS 390 million. May have a material adverse effect on the Company’s results, “in the words of the ISA itself.

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