Business & Economics

Court overrules regulator, allows Mizrahi-Union Bank merger

The Jerusalem Competition Tribunal today granted the appeal against the decision by the Israel Competition Authority director general against the merger between Mizrahi Tefahot Bank and Union Bank. Jerusalem Competition Tribunal Judge Oded Shaham ruled that no evidentiary foundation had been found that the merger would harm competition.

To the politicians’ dismay, the Competition Tribunal granted Bank Mizrahi Tefahot’s appeal and the appeals of the other parties in the transaction, thereby reversing the decision by the acting Israel Competition Authority director general and approving the merger between the banks. Minister of the Economy and Industry Eli Cohen and Minister of Finance Moshe Kahlon expressed strong opposition to the merger, which will remove a player from the banking market.

The acting Israel Competition Authority director general struck down the merger in May 2018.

Mizrahi Tefahot Bank argued that strengthening it as a competitive bank that emphasizes the quality of service to its customers and continually enlarged its market share would help it compete against Bank Hapoalim and Bank Leumi, Israel’s two largest banks, thereby benefiting the consumers.

In summarizing his ruling, Shaham wrote, “Taking into account the characteristics of Union Bank; the methods used in its activity; the difficulties it faces, including in efficiency; and given the absence of any significant indication that the bank was influencing the other players in the market, there are no grounds for ruling that its removal is likely to significantly detract from competition.

“This conclusion is not changed by the reform in the banking sector, which is still in the formative process. For all of these reasons, the view of the acting director general that the merger arouses reasonable concern about substantial damage to competition in the basket of banking services is not supported by the extensive foundation presented.

“There are grounds for the acting director general’s ruling concerning reasonable concern about damage to competition concerning credit in the diamond business. No foundation was laid for a pro-competition effect by the merger that could provide an appropriate counterweight for this damage. In these circumstances, the matter should be returned to the acting director general in order to address the question of whether this concern can be alleviated by setting conditions,” Shaham wrote.

Union Bank’s share price is up 16% on the Tel Aviv Stock Exchange. At the same time, the notice to investors in the Maya system was issued only an hour after the Competition Tribunal made its announcement.

Mizrazi Tefahot was represented by Adv. Giora Erdinast, Adv. Doni Toledano, Adv. Michal Rothschild, and other lawyers from the Erdinast, Ben Nathan, Toledano Co. law firm. Union Bank was represented by Adv. Zvi Agmon and Adv. Mattan Meridor. The controlling shareholders in Union Bank were represented by Adv. Dalia Tal and Adv. Niva Barg Livnat.

Published by Globes, Israel business news – en.globes.co.il – on November 28, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019


Article source: https://www.globes.co.il/en/article-1001309037

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