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

Israel's Competition Authority has placed a condition on the sale of the credit card company Cal, potentially scuttling the deal. The authority stipulated that Union, the intended buyer, must sell its entire stake in the Super-Pharm drugstore chain before the acquisition of Cal can proceed. This condition is expected to lead Union to refuse the terms, causing the deal to collapse.

The decision represents a setback for Discount Bank, Cal's current controlling shareholder, which is legally required to complete the sale within seven months as part of a regulatory reform separating banks from credit card companies. Union and the insurance company Harel had agreed to purchase Cal approximately a year ago for an estimated NIS 4 billion, with Union set to acquire 80% and Harel the remaining 20%.

The Competition Authority's primary concern is preventing anti-competitive practices in the pharmacy market. Cal possesses extensive data on the purchasing habits of roughly 4 million Israelis, and the authority fears that if Union retains both Cal and Super-Pharm, this information could be channeled to the drugstore chain, granting it an unfair advantage over competitors.

A lesser concern was raised regarding Harel's potential advantage in the health insurance sector, for which the authority imposed a ban on information sharing between Cal and Harel. 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 divest its Super-Pharm shares to acquire Cal.