Say Goodbye to Grocery Cartels

Cabinet Approves Panel to Lower Food Prices

Netanyahu calls for a breakup of the grocery industry cartels with introduction of competition via low-cost imports.

In another move aimed at lowering the cost of living, the cabinet approved Sunday a proposal to form a government team tasked with finding a way of lowering food prices by breaking import monopolies on produce.

The new committee will be headed by Harel Locker, the director general of the Prime Minster’s Office. It will explore ways to allow parallel imports of the same brands of food. The vote came as ministers heard a report by the Finance Ministry’s budget division, which found that 60% of the retail market for groceries is controlled by two supermarket chains.

“This market is a classic cartel,” said Prime Minister Benjamin Netanyahu, who sponsored the proposal. “I see this as the root of the problem ... This figure shows that there is no competition. This is a chronic problem that needs to be addressed by increased competition. Competition is the consumer’s friend, especially of weaker segments of society, and we must leave more money in the citizen’s pocket.”

The government has been taking up the cause of middle-class consumers amid growing evidence of the high cost of living in Israel, including a report last week by the Knesset Research and Information Center, which found that food prices in Israel are 25% higher than in the European Union.

It estimated that food prices in Israel rose by 16% after inflation in the nine years through 2013, compared with just 1.8% in the EU. It was a hike in the price of cottage cheese that set off the social-justice protests in the summer of 2011.

At the end of 2013, the finance and agriculture ministries approved the lowering of prices on a dozen price-controlled dairy products, by an average of 1.1%, and added two more to the list subject to controls. On January 1, import duties on most categories of clothing apparel were eliminated and duties on much fresh produce has been eliminated to mitigate the high prices caused by December’s storms.

“There exists an unacceptable phenomenon of historic arrangements that push up food prices and exploit consumers here,” Netanyahu said yesterday. “Food prices will not go down without opening the market to imports.”

Locker’s committee will include Health Ministry director general Ronni Gamzu, Economy Ministry director general Amit Lang and Finance Ministry budget director Amir Levi.

The previous Netanyahu government agreed to establish a committee led by the director general of the Health Ministry – which is responsible for permits to import food and toiletries – to address food imports, but the panel was never formed.

The committee will explore ways to increase the number of food imports in Israel, both of new products and by encouraging multiple importers for the products already available in Israel.

Among the ways that may be achieved is by increasing the number of overseas food plants awarded permits to export processed food to Israel using quality-assurance certificates granted by the manufacturers’ home country. That would do away with the need for certificates for each and every product.