McDonald's Israel was forced to cancel its exclusivity agreements in malls and shopping centers

McDonald's Israel has canceled its exclusivity agreements in malls and shopping centers, and as a result, the Competition Authority has closed the review file that began the matter. McDonald's has pledged to the commissioner not to sign any additional exclusivity agreements in the future.
Exclusive agreements at malls are a restrictive arrangement as they do not allow competing networks to enter the mall.
McDonald's announced to the Supervisor that, following changes that occurred in competition law in 2019, it decided to unilaterally cancel all exclusivity arrangements at the centers where the chain's branches operate. In addition, McDonald's has eliminated clauses that were included in its rental agreements that included shopping mall consent to reduce rents in the event of a competitor entry.
McDonald's had such clauses in contracts with Azrieli Group, Melisron, Big Shopping Centers Group and Gazit Globe Group. The Company has informed the Supervisor that there will be no party to agreements in the future that include exclusive clauses in commercial centers or rent reduction arrangements in the event of competing network entry.
Against the backdrop of all of the group's exclusive agreements at commercial centers before the Authority began its review and against McDonald's pledge not to reach such agreements in the future, the Commissioner decided to terminate the case.
"The Commissioner believes that the cancellation of all the exclusive arrangements at commercial centers without the need for intervention by the Competition Authority indicates the internalization of the norm that regards such arrangements, which may create a competitive concern and create an appropriate deterrent in relation to such agreements that harm the competition," said the Competition Authority.
For the past two years, the Competition Authority has been examining the agreements of the major chains with the malls, and has reached agreements with Super-Pharm, among other things, which eliminated the exclusivity that the Pharms had in the malls.