Israel's Competition Authority Blocks Cal-Union Deal Over Super-Pharm Stake

Israel's Competition Authority has demanded that Union Investments, part of the Union Harel Group seeking to acquire credit card company Cal, sell its 35% stake in the Super-Pharm retail chain. This dramatic requirement follows a year of delays and months of waiting for a decision, and comes after compromise attempts failed. Union Investments had previously rejected less stringent proposals, such as excluding its representatives from Cal's board after the acquisition.

The authority's primary concern is that Union Harel, which plans to buy Cal for 4 billion shekels from Discount and International Banks, would gain access to sensitive consumer data. Cal issues credit cards and processes transactions, and Super-Pharm operates the competing BE pharmacy chain. The authority fears Union Harel would leverage this combined data, which includes detailed transaction information and personal demographics, to its advantage.

Despite discussions, parties failed to agree on terms to prevent information transfer from Cal to Union, including the appointment of a supervisor. This impasse has led to the significant demand for the sale of the Super-Pharm shares, making the Cal acquisition appear unlikely to proceed. Union Investments has until November to finalize the deal, but a collapse could be announced sooner.

Discount Bank, legally obligated to sell its 72% stake in Cal under the Shoham Law, had previously indicated difficulties in finding buyers, both domestically and internationally, and sought leniency from regulators. Market sources expressed frustration with the authority's decision, arguing the information about Union's Super-Pharm stake was known and that the prolonged uncertainty harms Cal and the financial system. They also questioned how the authority's actions promote competition, as intended by the Shoham Law, by potentially leaving banks with unsellable assets or forcing sales to large entities with retail affiliations.