Economy Minister Dery Refuses to Sidestep Antitrust Authority on Natural Gas Deal

Security cabinet meeting ends without approving compromise with Delek Group and Nobel Energy by asserting the deal is a security issue.

Tomer Appelbaum

The security cabinet meeting on the government's pending deal with Israel's natural gas monopoly fell apart on Thursday after Economy Minister Arye Dery declared that he refuses to bypass the Antitrust Authority on the matter.

Prime Minister Benjamin Netanyahu left the meeting, while some officials and ministers were still discussing the clauses of the compromise.

The security cabinet convened on Thursday afternoon to discuss the advancing of a compromise deal with the natural gas companies and sidestep the Antitrust Authority by asserting that the deal is a diplomatic and security issue.

Finance Minister Moshe Kahlon, who recused himself from dealing with the natural gas issue due to his ties with businessman Kobi Maimon, did not take part in the debate. David Gilo, the Antitrust Authority commissioner, attended the meeting.

During the meeting, the government negotiating team with the gas monopoly presented its plan, and explained its contents. Security officials also presented their opinions on the geopolitical importance of advancing the natural as export contracts with Egypt and Jordan. After that, Antitrust Commissioner David Gilo, whose appearance at the session was a surprise for the members of the cabinet - explained his objections to signing the proposed agreement.

The ministers were then asked to vote on approving the security and diplomatic justifications for the plan - and voted unanimously in favor.

The next stage was supposed to have been a vote by the members of the security cabinet to authorize Economy Minister Arye Dery to sign off on invoking Section 52a of the Restrictive Trade Practices Law, which would allow the government to sidestep Gilo.

But Dery them shocked those present - and especially Netanyahu - and announced that after hearing the parties involved, he was no longer willing to sign and give up his authority. Netanyahu responded with anger to Dery's refusal to revoke the Antitrust Commissioner's authority on the matter, and  silenced him at the end of the meeting.

Netanyahu, who had to leave the meeting after two hours, is now working on a way to bypass Dery's authority too. But such an attempt may run into legal problems, since by law such authority is granted only to the economy minister, and changing the law would require the approval of the full Knesset.

Thursday’s meeting was required due to Gilo’s refusal to sign the government’s proposed agreement with the gas companies. Gilo maintains that the proposed compromise will not induce competition and will even endanger the public interest.

Gilo announced his resignation about a month ago in protest over the agreement but is still in office. In order to sidestep him the security cabinet will have to assert that the issue is related to security or foreign affairs. The government promised that after the cabinet debate it will release the agreement for public debate for at least a month. Only after that will the entire plan be submitted to the cabinet for approval.

Under the plan drafted by finance, infrastructure and justice ministries officials as well as the Prime Minister’s Office, Israel will “forgive” the companies forming the natural gas monopoly, Delek and Noble Energy, for allegedly acting in restraint of trade, contrary to the antitrust law.

In exchange the government will try to enforce restraining moves on the monopoly. Delek and Noble Energy have been conducting a campaign for a long time to soften the moves against them. They threatened that if the moves are forced on them unilaterally they will stop developing the gas reserves off Israel’s shores and may even take legal steps against Israel.

“Israel’s goal is to get the gas out of the ground as soon as possible,” a senior official in the Prime Minister’s Office said on Wednesday. “However, our interest is to cancel Noble’s monopoly, and for that we must bring competitors. If Israel wants international companies to compete for its gas, it must treat the veteran players well. It’s not wise to get Noble out of Israel. It will deter new players.”