Competition Authority's Data Concerns Scuttle Major Deals

The Israeli Competition Authority has torpedoed a potential deal involving Union and Harel acquiring credit card company Cal, citing concerns over the transfer of sensitive consumer data. The authority demanded that Union sell its 37% stake in Super-Pharm and prohibited information sharing between Cal and Harel. Despite months of negotiations for alternative conditions, the parties failed to reach an agreement, leading to the deal's collapse.

The Competition Authority's stringent stance stems from a growing global concern about the competitive advantage derived from access to and control of data. In recent years, data has become a significant business asset, and the authority now scrutinizes mergers for potential anti-competitive uses of information. The fear is that companies with access to vast datasets can leverage this information to gain an unfair advantage, potentially pushing competitors out of the market.

In the Cal deal, the authority worried that consumer habits data from Cal's four million credit card users could flow to Union's Super-Pharm, disadvantaging competing pharmacy chains. Additionally, Super-Pharm could gain insights into the shopping behavior of customers using Shufersal's BE credit cards, potentially solidifying its market position. The authority also flagged concerns regarding Harel, a major health insurance provider, potentially using Cal's data for personalized pricing, thereby harming competition in the health insurance sector.

This is the second major deal involving Harel to be blocked by the Competition Authority in under three years due to data concerns. In early 2023, Harel's proposed acquisition of Isracard, another major credit card company, was also opposed by the authority for similar reasons related to data access and potential market dominance in health insurance. Former Competition Authority officials emphasized that structural remedies, like divesting problematic assets, are often more effective and easier to enforce than behavioral remedies, which tend to be complex and difficult to monitor over time.