Israel's Antitrust Authority has issued a circular that sets forth procedures for due diligence investigations between competitors, due to the potential risk to competition created by the exchange of business information between competing entities.

The Antitrust Authority does not consider all such disclosures of information as potential risks to competition. Rather, the nature of the transaction and the measures taken by the parties to lessen harm should be evaluated. The circular sets forth the following rules of conduct:

  1. Identify "sensitive" information at the beginning of the due diligence process. Factors to take into consideration include the relevant market, the nature of the information, and the potential harm to competition that could result from disclosure. Sensitive information should be provided to competitors only according to the following rules.
  2. Sign a confidentiality agreement prior to the disclosure of any sensitive information.
  3. Disclose sensitive information selectively, in stages, disclosing only information actually required during any stage. Selectivity does not mean mutuality – mutual disclosure of information is not in itself sufficient reason for disclosure. Sensitive information should be returned or destroyed when no longer required for due diligence purposes.
  4. Maintain as low a level of detail as possible, in order to help prevent the ability to "reverse engineer".
  5. Use an external body, such as a lawyer or accountant, to review a competitor's sensitive information.
  6. Use dedicated teams and information barriers when viewing a competitor's
  7. sensitive information. Teams should be as small as possible to help avoid contamination, and not all members of the team should be privy to all information.
  8. Document information exchanges, in order to help monitor conduct and ensure careful and rigorous exchanges of information between competitors.

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