"When the state by an administrative order orders Reuven to beat up Shimon, it's very hard to accept the claim that Shimon has nothing to say in the matter," states El Al Israel Airlines (TASE: ELAL) in its appeal against the conditions that the Antitrust Authority has imposed on its merger with Knafaim-Arkia Holdings (TASE: KNFM), the parent company of Arkia Airlines.
Antitrust Authority director general Dror Strum claims that El Al has not right to appeal the conditions he set for the merger. El Al's attorneys, Adv. David Tadmor (Strum's predecessor as director general of the Antitrust Authority), Geva Haviv, and Tal Arad say that El Al explicitly notified Strum that the statement it submitted about the merger implied no consent to his demands.
El Al says that Strum set conditions that adversely affect airline, its business, and shareholders. It therefore has the right to appeal. El Al claims that Strum lacks the authority to oppose the merger, or to impose any conditions on it.
El Al says that Strum is unsettled by the merger, but that is not sufficient cause to oppose it. The airline says Strum should provide real foundations for his conditions on the merger. Mere concern about possible repercussions on future competition in the airline industry is not enough.
El Al adds that Strum's analysis contained many factual errors. It also claims that Strum ignores the presence of foreign airlines, and attaches great importance to Israeli competition against El Al, especially by Arkia. However, foreign airlines are El Al's main competitors, not Arkia, which controls only 4% of the relevant market.
El Al's appeal, filed yesterday, cites an economic opinion.
Published by Globes [online], Israel business news - www.globes.co.il - on February 23, 2005