Idan Ofer’s holding company The Israel Corporation and the Livnat family’s Taavura Group need special permission from the Antitrust Authority before they can bid for the state-owned Eilat port, ruled Antitrust Commissioner David Gilo.
While regulators and officials have long been talking about fighting economic concentration, this is the first clear step in that direction.
It comes before the government has approved any recommendations by the committee examining economic concentration.
Both the Israel Corporation and the Taavura Group are large groups, and both have holdings in shipping and transport.
After Gilo made his ruling, the Government Companies Authority told the two groups they needed to contact the trustbuster to receive permission to take part in the tender.
The Antitrust Authority is examining the matter due to concerns that letting one of these groups buy a stake in the Eilat port would harm competition because both own transport and logistics companies.
This conforms with the recommendations of the concentration committee.
The Israel Corporation, which controls the Zim shipping company, submitted a bid in the tender via Mifalei Tovala, a subsidiary of its subsidiary Israel Chemicals. Mifalei Tovala operates a private platform at the Eilat port to transport chemicals for Israel Chemicals.
The Taavura Group also bid in the tender. It submitted its bid via logistics company Maman, in which it has a 68% stake. Maman is a monopoly in storage and logistics at airports, and last year it won a tender to operate the Ashdod port’s logistics platform.
The Livnat family also runs the country’s largest truck fleet and is the Eilat port’s largest on-land transport contractor, with 70% of the market.
Should it win the tender, the Livnat family, which is still a partner in the IDB group on paper, intends to run the Eilat port in partnership with Dutch company APM, which runs the neighboring Aqaba port.
The Government Companies Authority informed bidders six months ago that it might need to change the tender in keeping with the recommendations being drafted by the concentration committee. In a letter sent to the 12 groups that passed the tender’s initial screening phase, the authority said ministers could issue orders designed to minimize economic concentration in keeping with the Government Companies Law.
While its draft tender contained no mention of this, the final tender approved by the cabinet might, it said.
The finance and transportation ministries were not pleased about the trustbuster interfering in the tender, fearing that few international companies would apply and that companies with synergies − or cross interests, depending which side you’re on − would consider the port a more valuable asset.
Yet the recommendations published by the concentration committee a month ago made it clear that the state’s priorities lay elsewhere.
The committee said last September that ministries should start taking into account competition considerations in privatization tenders, in order to keep excessive economic power out of the hands of a few. That chapter, written by Gilo himself, was crafted after the committee had found that this was not always the case.
“Considerations of concentration and competition aren’t always taken into account enough, and it’s important that they be considered when allocating state assets, rights, licenses and franchises,” the chapter states.
The committee recommended that any tender take into account competition within that given sector via a consultation with the trustbuster; until now, that consultation had been voluntary. It also recommended that the Antitrust Authority take into account licenses for assets worth more than NIS 150 million or that are crucial to national interests.
The committee did not state explicitly that certain groups would be banned from tenders, and it raised concerns that tenders already in the works would be exempt from any changes. For his part, Gilo said he believed the state had the right to consider these factors regardless of legislation.
“The public interest should be taken account in privatization processes,” he said.
