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Israel: Law on Protecting Book Industry Passed

(Aug. 8, 2013) On July 31, 2013, the Knesset (Israel’s parliament) passed the Law for the Protection of Literature and of Authors in Israel (Temporary Provision), 5773-2013 ([in Hebrew], The Knesset website (last visited Aug. 7, 2013)). The new Law introduces new requirements on the sale of books in Israel. These requirements are effective for a period of three years, starting on January 31, 2014, a period that can be extended under conditions enumerated by the Law. (Id. § 43.)

The Law lists as its objectives:

… to ensure [that] Israeli authors [receive] proper pay for their creations, to promote literature in Israel, to preserve cultural diversity in the publication and in the distribution of books in Israel, to provide readers an opportunity to select among a wide range of books according to their wishes and tastes, and to enable competition among book publishers and book stores in regard to the quantity, the variety, and the quality of books that are offered to the consumer. (Id. § 1.)

The Law defines “an Israeli author” as “a person who has written a book in Hebrew or in Arabic or a book that was translated into Hebrew or to Arabic, and at the time of contacting the publisher was an Israeli citizen or his/her regular place of residence was in Israel.” (Id. § 2.) Publishers must pay Israeli authors certain percentages from the invoice price of books sold during the first eighteen months following publication of their first edition (hereinafter the “protection period”). (Id. § 3.) The invoice price is determined by publishers and may vary between the printed and the electronic editions of the same book. (Id. § 4.)

Except under limited conditions enumerated by the Law, the sale of new books during the protection period for less than the invoice price is prohibited. (Id. §§ 6-7.) The provision of any remuneration for book stores salespersons for recommending specific books, authors or books published by particular publishers is similarly prohibited. (Id. § 9.) The adoption of pre-determined schedules of discounts on the sale of books, however, is permitted once a year based on a written agreement between chain stores and publishers. To qualify, chain stores must operate seven or more stores at different locations. (Id. §§ 8 & 1.) The Law imposes various sanctions including financial fines for violation of its provisions. (Id. §§ 17-32.)

According to the Law, the Ministry of Culture and Sports must allocate funding for the distribution of prizes for authors, poets, and publishers. (Id. § 39). In compliance with the Law, the Ministry has announced the allocation of ten prizes each for these three categories of cultural achievement. (Press Release, Ministry of Culture and Sports, The Law for the Protection of Literature and of Authors in Israel Was Approved by the Knesset [in Hebrew] (Aug. 1, 2013).)

According to the Ministry of Culture and Sports website,

The book and literature are regarded as product[s] of a definitive cultural value. … The need to regulate their status by legislation has evolved in recent years in many countries in the Western world.

A unique situation has existed in the State of Israel in recent years, [a situation] in which the activity of the book market is being dictated almost completely by a duopoly consisting of two large book chains that control about 80% of the market, with one of them characterized by a legal structure of vertical ownership that places it under the control of a large book publisher. This situation causes serious harm to the principle of free competition. The Ministry of Culture [and Sports] believes that in view of this situation, there is no other option than to regulate the market, even at the cost of a certain degree of intervention in free market conditions. (Id.)