Arrests Made After Probe Into Suspected Price-fixing for High-schoolers' Holocaust Trips

Police, anti-trust officials charge 6 firms with collaborating on prices offered for high-schoolers' Holocaust trips.

Israeli high-school students visiting Poland as part of their Holocaust-related trip, in 2011.
AP

Nine officials at six leading Israeli tourism companies were taken in for questioning Monday after a probe revealed they allegedly conspired to eliminate competition in the niche of flying Israeli high-schoolers to visit sites in formerly German-occupied Poland, Israel Police and Israel Antitrust Authority sources revealed Monday.

Operating as a de-facto cartel would constitute fraud and violation of antitrust law.

Following a months-long, covert investigation in which evidence was collected, investigators at the police and IAA have now begun the open stage of their inquiry, starting with raids on six tour companies on Monday. The homes of a few company executives were also searched. Investigators confiscated property and assets. One of those detained is also suspected of bribery.

At the Rishon Letzion Magistrates Court later in the day, the police were expected to ask to extend the detention of a few of the suspects.

The Education Ministry publishes tenders for tour companies to fly the high-schoolers to Poland, to visit former concentration camps operated by the Nazis and other Holocaust-related sites. Each school was supposed to be able to negotiate among all the six companies that applied in the tenders, and to choose the cheapest alternative to transport the teenagers to Poland.

However, in practice, the police suspect, there was no genuine competition. The companies allegedly coordinated their prices and divided up the market among themselves in advance.

At this stage, it seems the companies “fixed” the prices of their tour packages. The method of the company executives was not to create a single fixed price, but to create the illusion of competition. In practice, the firms jacked up, or cut, their prices in coordination with each other. “Discounts” were coordinated with an eye to maintaining maximal profits for all.

The joint police and antitrust investigation was not provoked by a complaint, but by leaked information.

None of the directors of the companies have been arrested, nor is it clear whether the highest management echelons at these tour companies, let alone their owners, knew of the alleged actions. Nor has the inquiry led to suspicions against anybody at the Education Ministry, at least at this stage.