Preventing Price Fixing by Israeli Banks: Antitrust Rules in Settlement of a Criminal Case

Abstract

Israel's Restrictive Trade Practices Law, 1959, after a period of relative quiescence, appears to have become the subject of significant enforcement efforts. A major event reflecting this development was the filing of criminal charges against the country's four leading banks (and a top executive of each) in mid-1984 for illegally combining to fix interest rates paid on negotiable certificates of deposit. The prosecution was eventually resolved early in 1986 by a plea bargain which included another major event – the first negotiation of remedial rules of conduct to prevent future violations (hereinafter the “Bank Rules” or “Rules”), which were hailed by the chief enforcement official, the Controller of Restrictive Practices, as adding an efficient and highly important tool to enforcement of the Law.The Bank Rules are similar to the consent decrees familiar to United States antitrust law. Indeed, the parties and the Chairman of the Restrictive Trade Practices Board, retired Supreme Court Justice D. Bechor, explicitly recognized and discussed the relevance of United States precedents in the proceedings which produced the Bank Rules. Just as the bank case has heightened awareness of the Law, so adoption of the Rules is probably a harbinger of remedies to come. The Bank Rules are thus of considerable practical relevance to counsel concerned with commercial contracts and practices as well as of general interest to those following the international diffusion of antitrust ideas.