ISRAEL Law and Practice Contributed by: Benjamin (Benny) Sheffer and Lance Blumenthal, S. Horowitz & Co.
review mechanism. The Advisory Committee for Eval- uating National Security Aspects of Foreign Invest- ments assesses proposed investments in critical infra- structure and specific technology sectors, regardless of whether the acquirer is foreign or domestic. Review may be required in the following circumstanc- es, inter alia: • the target operates essential services or infrastruc- ture (for example, power transmission, natural gas transportation, water systems, defence-related technology or cybersecurity services); • the investment grants governance, information or access rights enabling the investor to influence strategic assets; or • the investor has ties to a foreign government, operates in a hostile jurisdiction or otherwise raises national security sensitivities. Sector-specific regulatory frameworks can require authorisation prior to closing and allow the gov- ernment to block, unwind or impose conditions on transactions that create security risks. Public interest considerations may also arise in cases involving state- owned or formerly state-owned enterprises governed by the Government Companies Law. Foreign investors in the energy and infrastructure sectors should consult with the relevant regulator or ministry to confirm whether national security review applies and to incorporate any conditions into their transaction documents. Export Control Israel maintains an established export control regime and maintains commitments to various multilat- eral control arrangements, including the Wassenaar Arrangement, the Missile Technology Control Regime, and the Australia Group. Export controls apply to defence items, dual-use technologies and cybersecu- rity products, as well as certain chemicals, biological agents and other controlled materials. Relevant regulatory authorities include, inter alia:
• the Ministry of Defence – DECA (Defence Export Control Agency), which administers export licences for defence and dual-use items; • the Ministry of Economy and Industry, which over- sees economic sanctions; and • customs and law-enforcement bodies, which carry out monitoring and enforcement. Exporting controlled items without a valid licence can constitute a criminal offence and expose companies to civil and regulatory penalties. Brokering, techni- cal assistance and intangible transfers of controlled technology (including software and data) may also require licensing. Export controls frequently intersect with sanctions regimes and may require co-ordinated compliance for businesses operating in sensitive juris- dictions. 5.5 Antitrust Regulations Merger control in Israel is governed by the Econom- ic Competition Law, 1988, and administered by the ICA. Unlike other jurisdictions which have a voluntary regime, Israel has a mandatory pre-closing notifica- tion and approval system. A transaction may not be completed until merger approval is obtained if any of the statutory thresholds are met. Approval must be obtained where one or more of the following apply: • the merging parties’ combined market share exceeds 50% in any relevant market in Israel; • at least two of the parties have substantial turno- ver in Israel above statutory financial thresholds (updated periodically by the ICA); or • one of the parties has a monopoly position (mar- ket share exceeding 50%) in any market in Israel, regardless of whether that market is directly involved in the merger. The ICA is empowered to block, conditionally approve, or impose remedies on transactions that may signifi- cantly harm competition. In certain cases, the ICA may also review arrangements that may fall outside the defined thresholds where competition concerns are identified.
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