Fast food chain McDonald's Israel has canceled its exclusivity agreements in shopping centers. Following this measure, the investigation of the matter by the Israel Competition Authority will be dropped.
Last December, Israel Competition Authority head Adv. Michal Halperin began an investigation into the leases of McDonald's Israel franchise holder Aloniel. McDonald's Israel has 190 branches.
The reason for the investigation was concern that McDonald's Israel was in breach of a ruling that exclusivity agreements were illegal unless approval had been obtained from the Competition Authority. Under the Restrictive Trade Practices Law, such a breach could have resulted in monetary sanctions.
Halperin discovered, however, that even before the Competition Authority had begun its investigation, the chain had canceled its exclusivity agreements with shopping centers.
Aloniel notified Halperin that following changes in competition law in 2019 (including the new Restrictive Trade Practices Law that took effect during that year), it had decided to unilaterally cancel all of its exclusivity agreements in shopping centers in which McDonald's branches had operated. An announcement to that effect was sent to the shopping centers.
Aloniel also canceled clauses in its leases that contained an agreement on a reduction in the rent in the event of entry by a competitor (these included agreements with shopping mall companies Azrieli Group, Melisron, BIG Shopping Centers, and Gazit-Globe Group).
Aloniel further notified Halperin that in the future, it would not be a party to agreements containing exclusivity clauses in shopping centers or arrangements for reducing rent in the event of entry by a competing concern.
In view of the cancelation of the group's exclusivity agreements in shopping centers before the Competition Authority had begun its investigation and the commitment by McDonald's to avoid such arrangements in the future, Halperin decided to drop the matter.
In her announcement that the investigation had been terminated, Halperin said, "The Competition Authority head believes that cancelation of all of the exclusivity agreements in commercial centers without any need for intervention by the Competition Authority shows that the norm according to which such arrangements are liable to give rise to concern about competition and creating appropriate deterrence against arrangements of this type, which detract from competition, has been adopted."
Published by Globes, Israel business news - en.globes.co.il - on January 20, 2020
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