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Government watchdog probes legality of shutdown protest by Israel’s top chains

Competition Authority says it is investigating whether self-imposed closure by hundreds of outlets over demands for government financial assistance broke economic laws

An ultra-Orthodox Jewish man walks past a closed shop of the 'Castro' fashion chain in downtown Jerusalem on April 26, 2020. (Yonatan Sindel/Flash90)
An ultra-Orthodox Jewish man walks past a closed shop of the 'Castro' fashion chain in downtown Jerusalem on April 26, 2020. (Yonatan Sindel/Flash90)

The Israel Competition Authority said Sunday that it was probing possible breaches of competition laws by hundreds of large businesses that coordinated to remain closed on Sunday in a protest against the government, despite receiving approval to reopen.

The chains are seeking government compensation for recent closures and ongoing restrictions imposed due to the coronavirus outbreak. The shutdown was announced late Saturday and implemented Sunday.

The authority, which oversees fair trading and anti-trust laws, said in a statement that it had sought information regarding the protest, organized by the Association of Fashion and Commerce Chains, “to ensure that retailers’ activities are not in conflict” with competition laws.

“To the extent that the results of the checks show that the actions taken may have infringed competition in a manner that violates the provisions of the law — the Authority will not hesitate to take enforcement action,” the statement said.

As the government seeks to apply a gradual relaxing of strict lockdown measures that all but brought Israel’s economy to a standstill, it has faced criticism from business owners of all sizes, who say it is not doing enough to help them rehabilitate from crippling financial losses.

Attorney Mattan Meridor, who represents a protest action group of the Association of Fashion and Commerce Chains, said in a statement that, during talks last week, the authority indicated that the association was permitted to organize the shut down as part of its campaign for government assistance.

The authority allowed that “at this time, organization and action such as these could be protected by law, so long as the association ensures that the strike and other protest actions are taken in a way that remains within the framework of economic competition law,” Meridor said.

Illustrative: A general view of closed stores on Jaffa street in downtown Jerusalem on March 26, 2020. (Yonatan Sindel/Flash90)

Some 200 chains represented by the association, including leading stores in the clothing, optics, home decor, camping and sports industries as well as cafes and restaurants, chose not to open their doors even as many pandemic restrictions were lifted at midnight Saturday. A full (Hebrew) list is available here.

According to a government decision Friday, all stores that are not in shopping malls or outdoor markets are allowed to operate from Sunday if they adhere to guidelines regarding cleanliness, the wearing of protective gear and enforcing social distancing.

But large business owners are demanding government compensation for operation losses, in line with those announced for small businesses.

The Association of Fashion and Commerce Chains said in a statement Sunday that opening stores in a limited capacity now without a government-provided security net would only deepen their losses.

“Our proposal for compensation is fair and minimalist, which brings into consideration the other needs for public funds.”

The association is demanding five percent compensation for all businesses that have lost over 25% of revenue in March-April, and 10% compensation for businesses that lost over 50% of revenue; grants to business owners for each employee brought back from unpaid leave; increased government backing for loans to businesses.

The head of the National Labor Federation in Israel, Yoav Simchi, criticized large business owners, saying they were using their employees, many of whom remain on unpaid leave, as “hostages” in their fight against the government.

Stall-owners at Jerusalem’s Mahane Yehuda market protest the ongoing closure of their businesses, amid the Coronavirus crisis. April 26, 2020. (Yonatan Sindel/Flash90)

Channel 13 news reported that dozens of small and medium-sized business notified the association that they too were joining the shutdown protest, due to their own demands for government assistance.

Many small business owners in Israel are worried about their economic futures despite the fresh measures allowing most stores to reopen.

Meanwhile, there were clashes at Jerusalem’s Mahane Yehuda fruit and vegetable market where vendors protested the continued closure of the landmark open air market. One person was arrested in scuffles with police.

Women getting their nails done at a beauty salon in Jerusalem on April 26, 2020. (Nati Shohat/Flash90)

Hairdressers and beauty salons were permitted to resume operations from midnight Saturday, if hygiene regulations related to the virus are adhered to. In addition, restaurants and food shops are now allowed to sell products for takeaway, not just home deliveries, if a physical barrier is placed between the cashier and the customers.

However, a restriction barring the general public from traveling more than 100 meters from their homes (unless for work, shopping or other essential purposes) or more than 500 meters for exercising or prayers will remain in effect until after Independence Day, which ends Wednesday evening.

Additionally, the various fines for violating the guidelines have been doubled.

On Friday, the government approved an NIS 8 billion ($2.27 billion) plan to increase support for self-employed Israelis and small business owners who have been hit hard by the coronavirus, following accusations that Israel was not helping businesses forced to shut down.

Workplaces in the industry, production and services sectors are allowed to have 30 percent of their employees come to work, or 10 workers at the same time at the same workplace — whichever is higher.

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