Yesterday, Golan Telecom Ltd. petitioned the High Court of Justice to issue a temporary injunction against the Ministry of Communications' decision to reject its merger with Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) .
The filing of this petition seems somewhat strange, due to the severe dispute between the companies, which resulted from Golan's announcement that it wishes terminate its agreement with Cellcom. However, it may have been filed due to past agreements between the companies, obligating Golan to file a petition over such a decision, if the deal is rejected by state authorities.
Cellcom and Golan Telecom had signed an agreement to a sell its shares to Cellcom for NIS 1.17 billion, an agreement that was rejected by the Ministry of Communications and Antitrust Authority, leading to this petition.
Meanwhile, the companies had encountered substantial disagreements, leading Golan to turn to HOT Mobile Ltd. for network sharing, rather than use Cellcom's network. This agreement had also been rejected by the Ministry of Communications. Therefore, this petition addresses the original deal, and the parties will probably also file a petition to the Antitrust Tribunal.
Golan Telecom, represented by advocates Lior Porat and Asaf Avtuvi from the Gornitzky & Co. law firm, claims that the rejection of the deal is extremely unreasonable, and is outside the regulator's authority, due to the involvement of 'foreign' considerations based on improper political-media pressure.
Moreover, Golan also claims that the decision is based on an opinion subject to a conflict of interests (of Prof. Eyal Winter, who provided consultation both to the Ministry of Communications and to a competitor in the same sector). Golan claims that this is an international 'negative precedent' in a merger in a mobile market with five players, which ignores clear competitive data.
At the end of last week, the High Court of Justice announced that it had decided to reject Golan Telecom's petition over the Ministry of Communications' decision to oppose the agreement it had signed with Hot Mobile to use its network, rather than Cellcom's.
Published by Globes [online], Israel business news - www.globes-online.com - on September 5, 2016
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