Block exemptions are sets of rules intended to exempt certain types of arrangements from the requirement to obtain an individual exemption from the Competition Authority, even though they constitute “restrictive arrangements”, based on the parties’ self-assessment and subject to various conditions set out in the relevant rules. Each Block Exemption is limited to a period of up tp five years and should then be renewed.
On May 20, 2026, the Israel Competition Authority (ICA) published eight draft extensions of key block exemptions that had been enacted over the years under the Economic Competition Law and are about to expire, for public comment until July 19, 2026. The ICA is making use of this renewal point in time to reconsider and amend the “safe harbor” arrangements in these Block Exemptions.
The publication of the draft exemptions, and particularly the proposed changes included therein, reflects the ICA’s continuing trend of increased inspection of various arrangements (alongside increased scrutiny of mergers, as reflected in the merger guidelines recently published for public comment).
In practice, the proposed changes narrow the scope of the exemptions for certain arrangements, primarily by limiting “safe harbor” protections, which operate as a “safe zone” and negate the need to conduct a substantive analysis of the arrangement’s competitive effects.
In particular, the ICA has decided, in several block exemptions, to narrow the “safe harbor” protections relating to market-share thresholds of the parties, to shorten the periods during which the exemption applies, and to limit the types of restraints (that is, competition-restricting obligations assumed by parties to an arrangement) that are exempt from approval, on the grounds that the current exemptions permit arrangements that are overly broad and may raise concerns of harm to competition.
For example, with respect to the safe harbor protection provided under the Block Exemption for Joint Ventures – one of the most significant block exemptions – the ICA proposes, to limit two particularly significant and common provisions, found in many standard arrangements, only to a joint venture outside the parties’ competitive field (in contrast to the current position, under which such provisions were also permitted in a joint venture within the parties’ field of competition). The first provision is an obligation of a party to purchase a certain quantity of goods from the manufacturer designated to produce them while refraining from purchasing them from others. The second provision is a non-compete obligation for the duration of the joint venture and for a period of three years after withdrawal from it. In addition, it is proposed to reduce the term of arrangements that may benefit from the safe harbor from ten years to only five years. In parallel, it was emphasized that the self-assessment route, which is a significant component of the Block Exemption for Joint Ventures and an alternative to the safe harbor route with respect to joint ventures that no longer fall within the safe harbor protection will remain available with no changes being proposed.
The draft Block Exemption for De-Minimis Agreements also includes a substantive amendment that would significantly reduce the ability of parties to rely on this practical and useful block exemption. Because the block exemption provides a safe harbor for all types of arrangements that satisfy the market-share thresholds (other than naked restrictive arrangements of course), the ICA states that “there is concern that the market-share thresholds set therein are too broad and allow arrangements that entail some risk of harm to competition”.
Accordingly, and in line with the market-share thresholds commonly used in the corresponding European block exemption, it is proposed that, in agreements between competitors, the parties’ combined market share in the markets affected by the agreement cannot exceed 10% (instead of 15%), while the market share of each party in the product markets affected by the agreement shall not exceed 15% (as the current position of the block exemption).
Additional substantive changes are included in the proposed amendments to the Block Exemption for Exclusive Distribution Agreements, the Block Exemption for Exclusive Purchasing Agreements, and the Block Exemption for Franchise Agreements.
As the ICA notes, given that the self-assessment route under the General “Vertical Block Exemption” may also be applied to arrangements that do not fall within the safe harbor protections of these block exemptions, it is proposed to reduce their market-share thresholds from 30% to 20%, and limit the maximum duration of an arrangement eligible for the exemption from ten years to only five years. This constitutes a significant tightening with respect to these types of arrangements.
It is also proposed to eliminate the application of these exemptions to agreements entered into or extended orally. This is a significant point, as it requires the parties to such arrangements to document them in writing, including when an agreement executed in writing is later extended.
It should also be noted that, within the Block Exemption for Exclusive Distribution Agreements, it is proposed to exclude agreements that include the dissemination of recommended price lists, due to the concern that this could be used as price signaling or could in practice become resale price fixing in a manner harmful to competition. Here too, this reflects the continuing trend toward tighter oversight of arrangements and RPM arrangements in particular.
Alongside the five-year extension of the block exemptions, a number of amendments are proposed to certain definitions applicable to the block exemptions under the Economic Competition Rules (General Instructions and Definitions) (Temporary Order), 2006:
In other words, whereas currently an excess of up to 10% above the market-share thresholds set in the block exemptions for a period of five years did not require the submission of a new exemption application, it is now proposed to reduce this period to one year, and the parties would be required to submit the application within 30 days, for a renewed review of the arrangement.
By contrast, two notable draft exemptions preserve the current framework and merely extend their validity for an additional five years periods: thus, the ICA proposes to extend the Block Exemption for Agreements Between Affiliated Companies, without any further substantive change; and similarly with respect to the general Vertical Block Exemption (that is, arrangements between non-competitors), for which the ICA notes that it considered changing the definition of “competitors” but decided to leave it unchanged and extend the exemption in its current form.
The main impact is that businesses will need to re-examine whether arrangements that currently rely on a block exemption will continue to benefit from it, and in some cases conduct a self-assessment that includes a substantive analysis of the agreement’s impact on competition, and may even need to revise and adapt the agreement to the new legal framework.
Our antitrust and competition team members remain at your disposal for any questions or clarifications regarding the implications of the draft exemptions and the assessment of the applicability of the block exemptions to existing or planned arrangements.
