Israeli Importer Fined Over $3 Million for Blocking Personal Imports

The Israel Competition Authority has reached a settlement with Israeli importer I.E. Eyal Ltd., which operates the Original's and Factory 54 retail chains, requiring the company to pay over 3 million shekels to the state. This penalty stems from actions taken by the company that harmed the personal import of Rockport brand shoes into Israel.

An investigation by the authority revealed that Israeli consumers were purchasing Rockport shoes directly from the brand's U.S. website due to significant price differences between the U.S. and Israel. Consumers would order the shoes within the U.S. and then have them shipped to Israel. When Original's, the official importer, raised the issue of price disparities with the global brand owner during negotiations for better commercial terms, the international company proposed blocking access for Israeli shoppers and redirecting them to the Israeli "Original's" website.

Despite Original's contention that this solution was unsuitable for the issues they raised, the company cooperated by providing its Israeli website address to the global brand owner for the redirection. The Competition Authority viewed this as the importer enabling direct harm to personal imports and hindering consumers' ability to access competitive pricing. The blocking and automatic redirection were only halted after the Competition Authority launched its investigation, prompting the companies to reinstate free access to the U.S. Rockport website for Israeli users.

The proposed settlement will be open for public comment for 30 days before final approval. This action is part of a broader enforcement effort by the Competition Authority over the past two years concerning parallel and personal imports. A significant amendment to the Competition Law in September 2023 prohibits direct importers from actions that could harm parallel or personal imports, including sharing information with international manufacturers that could lead to supply chain tracking or blocking, especially to prevent competition from parallel importers or direct consumer purchases.

In addition to the legal amendment, the Authority issued guidance clarifying prohibited actions and initiated a revision of competition regulations to prevent agreements between foreign suppliers and distributors that discriminate against or block sales to Israel. As part of this proactive enforcement, the Authority has contacted 13 major direct importers to identify similar violations.