Four of Israel's Largest Banks Appeal Competition Authority's Concentration Group Ruling

Four of Israel's five largest banks, Bank Hapoalim, Mizrahi Tefahot, Discount Bank, and Bank Leumi, have filed an appeal with the Competition Tribunal against the Israeli Competition Authority's decision to designate them as a concentration group in retail banking services. The appeal was submitted on the final deadline day after several extensions. Bank Leumi declined to comment but is expected to also appeal, having requested an additional delay.

This legal challenge follows a lengthy process that began in March 2024, when the Competition Authority launched an investigation and summoned the banks for a hearing due to sharp interest rate disparities between current accounts, deposits, and credit products, which led to record profits for the banks. In early May 2024, Competition Commissioner Michal Cohen declared the five banks a concentration group and issued four operational directives set to take effect in May 2027. These directives aim to prohibit price discrimination and preferential interest rates for negotiating customers, increase transparency and accessibility of deposit and fund information at decision points, and facilitate the transfer of deposits between banks.

The banks' appeal centers on claims that the Competition Authority lacks jurisdiction, that competition exists in the market, and that the intervention contradicts the position of the sector's primary regulator, the Bank of Israel. They warn that the measures could disrupt existing mechanisms and harm customers. This dispute highlights a regulatory clash, as the Bank of Israel criticized the designation as an extreme, disproportionate, and declarative step. The Competition Tribunal's ruling will not only determine the fate of the operational directives but also redefine the boundaries and authority between the Competition Authority and the banking regulator.