Israel's Competition Authority Scuttles Credit Card Firm Sale Over Pharmacy Holdings

Israel's Competition Authority has effectively blocked the sale of the credit card company Cal by imposing a condition that the prospective buyer, Union, must sell its entire stake in the Super-Pharm drugstore chain. This stipulation is expected to lead to the collapse of the deal, as Union is reportedly unwilling to comply.

The decision represents a significant setback for Discount Bank, Cal's current controlling shareholder, which is legally mandated to divest its stake within seven months as part of a regulatory reform separating banks from credit card companies. The sale, agreed upon nearly a year ago for approximately 4 billion shekels, involved Union acquiring 80% of Cal and the insurance company Harel acquiring the remaining 20%.

The Competition Authority's primary concern is preventing anti-competitive practices in the pharmacy market. It fears that if Union retains ownership of both Cal and Super-Pharm, sensitive consumer data held by Cal, which includes purchasing habits of millions of Israelis, could be illicitly shared with the drugstore chain, granting it an unfair advantage over competitors.

A lesser concern was raised regarding Harel's potential access to health insurance data, for which the authority imposed a ban on information sharing. The authority's approval is valid for one year or until the deal is finalized, whichever comes first, leaving Union with a limited timeframe to decide whether to abandon its Super-Pharm shares to proceed with the Cal acquisition.