Antitrust Chief Bars State-owned Ports From Gaining Control of Private Rivals

Ruling also makes it a criminal offense to interfere with operations of planned private ports.

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Antitrust commissioner David Gilo ruled Wednesday that the companies operating the Ashdod and Haifa ports are an oligopoly in loading and unloading shipping containers, a move that will bar the two companies from trying to gain control of the private ports being planned by the government.

The decision, which comes after hearings lasting half a year, effectively prevents the government from buckling under to pressure from dockworkers’ unions and the Histadrut labor federation to undermine the port reform by opening a window for the state-owned ports to gain control of the planned private ports.

The unions have been seeking to block the impending competition, fearing that it will undermine the wages and conditions they now enjoy at the two state-owned ports. This time, however, the government is determined to break the unions’ stranglehold, saying their high costs and inefficiency damage Israel’s trade-oriented economy. Unions and the treasury disagree about the terms of the port reform, of which private ports are the centerpiece.

Gilo’s decision could be seen as a move to prevent a repeat of what happened some 10 years ago, when the government folded to union pressure by handing the new Carmel pier in Haifa and Hayovel pier in Ashdod, which it built at a cost of billions of shekels from its own budget to be operated privately, to the two port companies.

“The declaration will first and foremost ensure competition, bolster steps by the government, and prevent importers and exporters from being dependent on the ports,” said Economy Minister Naftali Bennett on Wednesday, calling Gilo’s decision a brave move. “Israel is an economic island and therefore its dependence on seaports is almost absolute. The lack of competition imposes a very costly burden amounting to hundreds of millions of shekels a year on the Israeli public.”

Under the ruling, neither the Ashdod Port nor the Haifa Port companies, both of which are owned by the government but are effectively in the hands of the powerful dockworkers’ unions, are permitted to operate any other port. Nor can they provide port services anywhere except at the sites they currently use. The port companies and their employees are barred from competing in the international tenders being issued by the government, nor can they operating the new docks being developed at the Bay Port in Haifa or at the South Port at Ashdod.

Gilo also forbid the existing ports from doing anything that would thwart or hinder another port operator from entering the port business or carrying out its operations, saying any such violations would be regarded as a criminal offense.

In addition, until the private ports are built, any expansion of infrastructure at the two existing ports will require the antitrust commissioner’s approval. This directive could prove a setback for the Transportation Ministry’s intention to offer the ports to extend their breakwaters or build them new piers in exchange for their agreeing to the reform.

The Ashdod Port company responded that it is considering what action to take on the matter, including an appeal to the Antitrust Tribunal. The Haifa Port company declined to comment.

Containers at Ashdod Port. The ports were among the most profitable government companies in 2013.Credit: Tomer Appelbaum

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