Sources at the Antitrust Authority may order Ilan Ben-Dov to sell Suny Electronics Ltd. (TASE: SUNY) following his acquisition of the controlling interest in Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) last week. Suny is the Israeli franchisee for Samsung Electronics Co. Ltd. (KSX: 5930) cellular telephones, which are sold to all three of Israel's large cellular operators: Partner, Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), and Pelephone Communications Ltd.
The Antitrust Authority is concerned about a possible restraint on trade resulting from Ben-Dov's takeover of Partner through Suny subsidiary Scailex Corp. ltd. (TASE: SCIX; Pink Sheets:SCIXF). For example, Suny could raise the prices of Samsung cellular telephones sold Cellcom and Pelephone.
Antitrust Authority sources believe that one of the first things that Antitrust Authority director general Ronit Kan will thoroughly examine in the Partner deal is Suny's strength in cellular telephone market, and will demand data from Suny for this purpose.
If the review finds that Suny has no significant market strength, there should be no problem with its indirect acquisition of Partner, and no regulatory restrictions will be imposed on the company. If, however, the Antitrust Authority finds that Suny is a major force in the market, it may be order to relinquish its exclusivity to Samsung cellular telephones. In an extreme scenario, Ben-Dov could be compelled to forego importing Samsung telephones and sell Suny.
It is also possible that Samsung will make demands of Suny regarding its standing as the sole importer of its telephones, and impose restrictions on Suny to avoid harming Samsung's market share in Israel.
Kan will also examine Suny's retail chain Dynamica Cellular Ltd., which provides services to Cellcom. Antitrust sources say that it is clear that Ben-Dov will have to sell these stores, and that Cellcom will probably not want to continue the partnership following his acquisition of rival Partner.
Published by Globes [online], Israel business news - www.globes-online.com - on August 16, 2009
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