Towards the end of 2024, the Israel Competition Authority (ICA) announced that one of the main enforcement priorities for the coming year would focus on actions to hinder parallel imports. The amendment to the Competition Law, which introduced the prohibition against harming parallel imports, is one component of the “Import Reform” that has been in the process of implementation in recent years.

Recently, the ICA notified the direct importer of KYMCO scooters in Israel of its intention to impose a penalty of approximately USD 4 million, subject to a hearing. According to the ICA, in 2024, an Israeli importer engaged with a supplier in Poland for the parallel import of hundreds of KYMCO scooters to be marketed in Israel. Shortly after the parallel import commenced, a representative of the direct importer visited the showroom of the parallel importer, photographed the chassis numbers of KYMCO scooters, and forwarded the photos to KYMCO. That same day, the scooter supplier informed the parallel importer that it was halting the supply of scooters due to instructions received from the manufacturer, along with the attached photos.

One of the actions that, under the Law, may be considered as potentially
harming parallel imports is when a direct importer reports to the manufacturer about goods sourced from parallel imports, in a way that enables tracking the goods’ supply chain. According to ICA’s findings, cutting off the supply of scooters to the parallel importer prevented the development of this competitive avenue by the latter. The ICA further noted that the conduct of the direct importer allegedly caused significant harm to competition in the market, which is highly concentrated, or at least, posed the potential for such harm. Competition could have resulted in price reduction, improved service, potentially increased product variety, and encourage entry of addional importers. The ICA also deemed the action to primarily aim at preventing or reducing competition from parallel imports. Consequently, ICA argued that the direct importer’s action fulfilled three alternative criteria, any one of which alone could constitute a breach.

This is the first enforcement action against a direct importer since the latest amendment concerning parallel imports came into effect. Given the ICA’s declared policy, it is likely this will not be the last case in the near future. The prohibitions in this context are broadly defined in the Law, making it essential that enforcement actions are implemented wisely and in a way that allows official importers as well to safeguard their legitimate interests. In any case, compliance with the new requirements may necessitate changes in business practices, including in the drafting of agreements with foreign manufacturers as well as local distributors. Therefore, it is crucial for official importers to increase awareness on the subject and prepare accordingly.

Join us for an insightful seminar on cross-border M&A transactions and Exits. Discover the strategic intricacies, regulatory considerations, the role of insurance, and the risks and success stories that shape these international transactions. Our expert speakers will delve into the challenges and opportunities inherent in cross-border deals, providing valuable insights for businesses navigating the complexities of global mergers and acquisitions. Whether you are a seasoned professional or new to the world of cross-border transactions, this seminar promises to broaden your understanding and equip you with the knowledge to navigate the evolving landscape of international business. Don’t miss this opportunity to gain a competitive edge in the world of cross-border M&A and exits.


March 11  |  9:00-12:00   |  ERM – Yigal Alon 94, Alon Tower 2, Tel Aviv, Floor 36


Schedule

9:00      Breakfast reception

9:30      Introduction   

9:40      ERM: Insights on global M&A’s: A view from the US, Germany, and the UK

Galit Farkash, Partner corporate and M&A

Nimrod Rosenblum, Managing Partner and Head of Corporate and M&A

Ron Abelski, Partner and head of German Desk

10:10   WTW: Unlocking Value: The Role of Insurance in M&A Transactions

Joshua Begner, Head of Private Equity and M&A Israel

10:40   Experts Panel: What every GC should consider when looking to set up an exit or acquire a target

Featuring:

Tamar Arad-Maoz, Chief Legal Officer, Minute Media

Gilad Zohari, Israel Practice, Latham & Watkins

Amir Shani, Deal Advisory Partner, KPMG Israel

11:30-12:00 – Q&A


*The event will be held in English and Hebrew.

 

Itamar Lev Eldar has been promoted to the partnership in ERM’s Corporate & M&A, and Banking & Finance practices.
Itamar is experienced in acting for clients on the full spectrum of international and domestic financing transactions as well as on a broad range of corporate law matters, including mergers and acquisitions, venture capital, and private equity transactions.

Golan Laihtman has been promoted to the partnership in ERM’s Real Estate and Urban Renewal department.
Golan advises real estate businesses in complex residential transactions. Golan specializes in residential, project financing and accompaniment of entrepreneurs and land owners in urban renewal projects.

Especially in this period, we believe it is important to promote excellent lawyers to the partnership.

We are excited to start the new year by welcoming Itamar and Golan as partners at the firm – good luck!

For the full article in Walla Finance click here

 

 

 

The challenging market conditions dramatically affect the ability of tech companies to raise funds and means that some companies are forced to raise at a lower valuation than previous rounds.

When faced with the possibility of a down-round, it is advisable to first explore all other available alternatives but undertaking a down-round is not the end of the road if properly prepared for.

Simon Marks, Partner and Head of the High-Tech practice and Adv. Adi Rafaeli, discuss certain points to consider when undergoing a down round.

For the full article

In a television interview for Bizportal, our partner, Adv. Rotem Perelman-Farhi, head of the Technology and Data Protection Department, reviews the legislation in Europe and the USA, and discusses what is expected in Israel and the potential impact on Israeli and international companies.

For the full interview (in Hebrew),

 

 

The European AI Act is a comprehensive regulatory response to the challenges and risks posed by the rapid advancement of technology and artificial intelligence (AI) (see our summary here). Originally proposed in 2021, the legislative process faced a notable disruption when OpenAI’s ChatGPT was launched on 30 November 2022. This required a change to the draft text, creating specific regulations for generative AI.

What are General Purpose AI (GPAI) models?

The AI Act defines a “General purpose AI model” (also known as a foundation model) as an AI model that, among others, can perform a wide range of distinct tasks regardless of the way the model is placed on the market and that can be integrated into a variety of downstream systems or applications. This term includes AI models that are built on top of so-called Large Language Models, or generative AI such as image or sound generation tools. Other GPAIs are used to build applications that help with creating computer codes, analysis of medical images or different types of decision-making with economic consequences.

The AI Act is clear that AI models do not constitute AI systems on their own; they are, however, often integrated into and form essential part of AI systems. Providers of GPAI models are subject to obligations that are slightly different from the general obligations for providers of AI systems. This distinction also clarifies that GPAI models do not constitute high-risk AI systems, as they are not AI systems. Instead, the AI Act introduces the sub-category of GPAI models that pose systemic risks, which is further explained below.

Documentation and Transparency Obligations

Overall, the set of obligations that applies to providers of (non-systemic risk) GPAI models can be considered “lighter” than those that apply to providers of AI systems. Providers of GPAI models are required to keep their technical documentation up-to-date and make it available to the (newly founded) AI Office and national regulators. They also have to provide certain information and documentation to downstream providers that have integrated the GPAI model into their AI system. Additionally, they need to make publicly available “a sufficiently detailed summary about the content used for training of the GPAI model, based on a template provided by the AI Office”. This summary should list the main data collections or sets that went into training the model, such as large private or public databases or data archives, and explain which other data sources were used. While the summary does not need to be technically detailed, it should list the main data collections or sets that were used to train the model. It is expected that the template will also take into due account the need to protect trade secrets and confidential business information.

What about Copyright?

Generative AI made headlines mostly due to a wave of infringement claims from rightsholders, mainly in the US, who sued various AI providers such as OpenAI for copyright infringement arising from the alleged use of their works during the training of their AI models. In light of the issues arising from the interplay of generative AI and copyright law, the AI Act requires that providers of GPAI models put in place a policy to ensure compliance with EU copyright law. This policy needs to include, in particular, the provider’s commitment to respect any express “opt out” declaration by a copyright holder that their works may not be used for the purposes of text and data mining (Art. 4(3) of the EU’s Digital Single Market Directive 2019/790).

Recital 60j also deals with the international dimension of said text and data mining exception. It clarifies that providers may not circumvent this minimum standard of protection by placing an AI model on the EU market that has been trained in other jurisdictions with lower copyright standards. This is intended to ensure a level playing field among providers of GPAI models.

GPAI Models with Systemic Risk

The new version of the AI Act includes a new subcategory of GPAI models. They will be considered “GPAI models with a systemic risk” if one of the following two criteria is fulfilled:

  • High impact capabilities of the GPAI model, which are presumed when the cumulative amount of compute used for its training measured in floating point operations (FLOPs) is greater than 10^25[1]; or
  • An individual designation decision by the EU Commission that takes into account for example the number of parameters, quality and size of the dataset, input and output modalities or the reach measures in business users.

Providers of GPAI models with systemic risk have additional obligations, such as performing tests and model evaluations, conducting risk assessments and taking risk mitigation measures, reporting serious incidents (such as an incident that causes the death of a person, leads to an irreversible disruption of the operation of critical infrastructure, or that causes serious property damage) to the AI Office and national authorities, and ensuring an adequate level of cybersecurity protection.

For more information and assistance related to compliance with the EU Artificial Intelligence Act, please reach out to us at ERM.


[1]  The EU Commission will need to adapt this threshold in the light of evolving technological developments, such as algorithmic improvements or increased hardware efficiency, in order to keep up with the ever evolving state of the art.


The review was written by Rotem Perelman – Farhi, Partner and Heads of the firm’s Technology & Data Department and Dr. Laura Jelinek, Associate in the the firm’s Technology & Data Department.


* This newsletter is provided for informational purposes only, is general in nature, does not constitute a legal opinion or legal advice and should not be relied on as such. If you are seeking legal advice, it is essential to review the specific facts of each case in detail with a qualified lawyer.

The Ministry of Finance’s November 2023 outline, as amended and approved to date:

The Israeli Ministry of Finance has published a revised compensation plan to support businesses affected by the Sword of Iron war commenced following the 7 October 2023 terror attacks against Israel. The outline includes a business continuity grant for businesses all over the country, as well as certain reimbursement of expenses in particularly badly affected areas of the country.

Business Continuation Grant:  Pursuant to the outline, the property tax compensation fund will compensate businesses all over the country whose turnover is NIS 12k to NIS 400m and which incurred a decrease in turnover of over 25% for a one-month report or 12.5% for a bi-monthly report in the months of October and / or November 2023.

Businesses that began operating after 2 September, 2022, will have their eligibility examined according to a monthly average of turnover over the period of the business’ activity up until the end of August 2023. Certain businesses that report on a cash basis with delayed payment terms, will be given the option to receive compensation based on their reports for the months of November and/or December 2023.

The compensation is calculated and granted based on the business’ maximum yearly turnover and the amount of the decrease in the turnover, except in certain exceptional cases.

Businesses with a maximum yearly turnover of NIS 12k and up to NIS 300k will be entitled to receive a compensation grant in accordance with the following table (the “Compensation Table”):

Amount of the decrease in the turnover
Maximum business yearly turnover 25-40% 40 – 60 % 60 -80 % Above 80%
NIS 50,000 NIS 1,750 NIS 1,750 NIS 1,750 NIS 1,750
NIS 90,000 NIS 3,150 NIS 3,150 NIS 3,150 NIS 3,150
NIS 107,000 NIS 4,200 NIS 4,200 NIS 4,200 NIS 4,200
NIS 200,000 NIS 3,125 NIS 4687.5 NIS 7,500 NIS 9,375
NIS 250,000 NIS 4,000 NIS 6,000 NIS 9,600 NIS 12,000
NIS 300,000 NIS 4,675 NIS 7,013 NIS 11,220 NIS 14,025

VAT exempt businesses will be granted a fixed amount of compensation as follows: (i) businesses with a turnover of up to NIS 49,800 will receive NIS 1,750; (ii) businesses with a turnover of up to NIS 90,000 will receive NIS 3,150; and (iii) businesses with a turnover of up to NIS 107,000 will receive NIS 4,200.

Businesses with a yearly turnover of NIS 300k and up to NIS 400m will be entitled to receive a business continuity grant which will consist of reimbursement of expenses of between 7%-22%, depending on the degree of damage to the business turnover, with the exception of certain sectors with different arrangements (including the agricultural sector for which additional support is being given through various schemes), as well as a reimbursement of a portion of up to 75% of salary expenses based on a formula which contemplates the level of impact on the business. Moreover, the outline stipulates a minimum compensation amount for such businesses, which is equal to the compensation amount granted to businesses with a NIS 300k turnover as described in the Compensation Table.

The outline stipulates the cap amounts of such compensation grants, being set at: (i) for businesses with a turnover of NIS 300k and up to NIS 100m – an amount of NIS 600k; (ii) for businesses with a turnover of NIS 100m and up to NIS 300m, the cap is NIS 600k with a top-up based on revenue above NIS 100m up to an aggregate maximum of NIS 1.2m; and (iii) for businesses with a turnover of NIS 300m and up to NIS 400m a cap of NIS 1.2m.

See our prior update on this in Hebrew –


* This newsletter is provided for informational purposes only, is general in nature, does not constitute a legal opinion or legal advice and should not be relied on as such. If you are seeking legal advice, it is essential to review the specific facts of each case in detail with a qualified lawyer.

In light of the ongoing Swords of Iron war, the Israeli court have issued regulations amending typical filing timelines and court operations. These regulations are updated regularly and as such changes should be tracked.

  • Law on Postponement of Deadlines (Order of Time – Iron Swords) (Contract, Judgment or Payment to the Authority), 2023 (the “Law”)

The Law grants a 30-day extension for any deadline set forth in a contract, a judgment, or for payment to a Governmental Authority, to the extent such deadline falls at any time between 7 October and 7 December 2023 (the “Defined Period”). The extension applies, inter alia, to the following persons: (1) IDF soldiers, (including soldiers drafted on reserve duty); (2) police officers; (3) prison guards as defined under the Israeli Police Ordinance; (4) firefighters; (5) missing persons, abductees, or  persons being held captive; (6) those who resided prior to the enactment of the Law in towns which were forcibly evacuated as set out in the Law; (7) persons hospitalized, for more than 7 days, due to a terror-related injury; (8) estates of eligible persons set out above (except evacuees); (9) spouses of eligible persons set out above who bear the legal liability jointly with them; (10) certain employees or volunteers in rescue organizations working on a full-time basis.

The Defense Minister, with the consent of the Minister of Justice and the Minister of Finance, in consultation with the Ministry of the Interior and the approval of the Knesset Foreign Affairs and Defense Committee, are authorized to extend the Defined Period until 31 December 2023, and may also prolong the extension itself.

The extension does not allow for the delay of alimony payments or payments owed pursuant to employment contracts.

  • Ministry of Justice and the Courts Administration

On October 8, 2023, the Minister of Justice declared a special state of emergency, since which time the Israeli court system has been operating on an emergency schedule. During such period, hearings are limited to urgent matters, such as hearings on arrests and releases on bail, requests for urgent remedies in civil cases, urgent petitions for judicial review to the Supreme Court and hearings on offences relating to the state of emergency. Matters that are not defined as urgent are automatically postponed until the end of the emergency period.

On October 18, 2023, in a special announcement by the Director of the Courts and the President of the National Labor Court, additional types of matters were added to the list of hearings that may proceed during this period, as well as authorizing court presidents to allow for additional hearings at their discretion. Notwithstanding the suspension of most hearings, secretaries of most courts continue to remain operative thus allowing for the submission of new pleadings (both physically and through the court’s online system).

On November 10, 2023, the Minister of Justice extended the notification of the state of emergency until November 30, 2023, and signed an amendment to the Regulations of the Courts and Enforcement Agencies (Temporary Order) (Judicial Procedures in a Special State of Emergency), 2023, which set a goal of a gradual return to an “emergency routine”.

This amendment further expanded the list of matters which the courts would deal with during the emergency period, including, for example, pre-trial hearings in civil cases which may be held via videoconference (the amendment also allows for such hearings to be held in person, subject to the parties’ consent).

The state of emergency also imposed an automatic extension for all deadlines, inter alia, for fulfilling court orders and submitting court documents, so that the period during which the state of emergency is in place shall not be counted for the purpose of meeting such deadlines, and shall therefor be extended accordingly.

With effect from 1 December 2023, the state of “emergency routine” for the Israeli court system was suspended in most cases, but remains in effect for parties to a case (or their counsel) who remain in active duty relating to (or other specific categories of people directly affected by) the Swords of Iron war.

A party affected by this decree may apply to the president of the pertinent court with a request to deviate from them in specific circumstances.

For up to date information or if you are affected by these matters, our disputes team stands ready to assist.

 


* This newsletter is provided for informational purposes only, is general in nature, does not constitute a legal opinion or legal advice and should not be relied on as such. If you are seeking legal advice, it is essential to review the specific facts of each case in detail with a qualified lawyer.

Many of our friends will have seen the overwhelming community spirit and large number of civil and business initiatives established in the wake of the 7 October 2023 terror attacks on Israel.  There is no shortage of extremely worth causes (many philanthropic causes can be seen here).  In addition, many of Israel’s leading law firms have come together to create Lawyers for Israel STAND WITH HUMANITY to provide updates and legal commentary on ongoing events.

One project we have decided to highlight is ReGrow Israel, an emergency – a farmers’ fund, coordinated by the Volcani International Partnerships, and focused on post-war agricultural support for Israeli farming communities devastated in the 7 October 2023 attacks. The fund is targeting US $100m and was launched at the request of and in partnership with all the communities (kibbutzim and moshavim) in Israel. ReGrow has adopted a strategic, forward-looking approach, focused primarily on medium to long-term agricultural projects. The fund’s key objective is to rebuild back better. It will not only look at rebuilding, but the integration of key new innovations. For this purpose, an innovation taskforce has been established comprising Israel’s leading agricultural scientists, agronomists and agri-tech companies. The fund’s direction will be managed by a tier-one team of renowned Israeli agricultural experts and local leaders, and will be advised by former US Secretary of Agriculture, Dan Glickman. The fund will also collaborate with Israeli agency ‘Tkuma’ to ensure maximum impact.

Please contact us for more information on initiatives in Israel, or if you or your contacts might consider making impactful donations to ReGrow Israel.

 


* This newsletter is provided for informational purposes only, is general in nature, does not constitute a legal opinion or legal advice and should not be relied on as such. If you are seeking legal advice, it is essential to review the specific facts of each case in detail with a qualified lawyer.

 

 

The Ministry of Finance’s November 2023 outline, as amended and approved to date:

The Israeli Employment Service has outlines certain concessions (summarized at the bottom of the Ministry of Finance’s circular) regarding the ability for businesses to put staff on unpaid leave, and the corresponding rights of those on whom unpaid leave is imposed.

These concessions include:

  • reducing the requirement to first offset accrued vacation days before putting staff on unpaid leave;
  • Extending unemployment benefits for those who would otherwise have used up 180% of their eligibility days within the last 4 years;
  • reducing the minimum period of employment to qualify for unemployment benefits (to 14 days down from 30);
  • reducing the period of paid employment required to just 6 of the last 18 months, so as to qualify for benefits;
  • providing special grants to people who have been displaced as a result of the Swords of Iron war;
  • providing special grants to people aged 67 or above who have become unemployed during the war; and
  • suspending the lapse of the 60-day protection period (in which those returning from parental leave cannot be rendered unemployed).

In matters relating to employment, even more so than in other areas, the law and practice changes frequently in accordance with official circulars. As such, we recommend consulting with our employment law department in case of any queries, to ensure the most up to date information is available to you.


* This newsletter is provided for informational purposes only, is general in nature, does not constitute a legal opinion or legal advice and should not be relied on as such. If you are seeking legal advice, it is essential to review the specific facts of each case in detail with a qualified lawyer.