Government regulation and bureaucracy, not business cartels and monopolies, are now the main impediments of the economy, Prime Minister Benjamin Netanyahu said Thursday.
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“The main obstacle is the cartel of the regulators, and I intend to deal with it,” the prime minister said wryly in a speech to a meeting in Tel Aviv of the Manufacturers Association. Netanyahu also promised to renew efforts to reduce taxes.
If industry is to thrive, regulation must be eliminated, Netanyahu said. “I acknowledge that we are tying your hands and binding your feet. It is reflected in over-regulation,” he said. “We are determined to reduce it and [reduce] bureaucracy. By our count, there are close to 200 regulatory entities with thousands of regulations, and each regulator is looking only at its own area of responsibility. No one is figuring out what [each] regulation is costing.” Netanyahu said Harel Locker, the director general of the Prime Minister’s Office, is working on curbing excess bureaucracy and regulation.
Hinting at criticism in the industrial sector over governmental action against monopolies and cartels as part of the government’s effort to enhance competition and reduce the cost of living, Netanyahu vowed to continue to deal with concentration of economic power. “We want competition, not monopolies and cartels,” he said.
The prime minister did underline the importance of industry to the country, however, and addressing Zvi Oren, president of the Manufacturers Association, said, “You are an important leader of industry,” stressing his choice of the term “industry,” which he called a central component of Israel’s economy. His emphasis was apparently in response to displeasure in the manufacturing sector over Ecomomy Minister Naftali Bennett’s move to change the name of his ministry from the Ministry of Industry, Trade and Labor to the Economy Ministry.
For his part, the antitrust commission, David Gilo, came to the defense of regulatory agencies in a speech before the same gathering. The critics of his own agency who claim that it has too much power are people with their own self-interests who want to preserve the status quo, he said. Gilo said his agency does not have excessive power. “The authority is no broader than the authority in other enlightened countries,” he argued. “There are many import impediments, monopolies, highly concentrated markets and a documented problem of the cost of living in Israel. Our goal is to have the consumers get more.”
That would usually mean that manufacturers earn less, he acknowledged. “That’s the source of the tension between us, but competition is also good for industry and the economy, because many times the victim of practices that we stop can be a manufacturer or a company that provides services.” Gilo said his agency intends to enforce the ban on excessive pricing by monopolies, despite the criticism that the antitrust commission has come in for. “We are plugging a hole in enforcement. Inaction provides a license to unsupervised monopolies to demand whatever price it wants from the consumer.”
Nonetheless, he said, barring excessive pricing is a last resort. “If monopolies don’t charge prices that exceed 20% of their real costs, they will immunize themselves from an Antitrust Commission investigation.”