Israel Antitrust Authority Weighing Fines on Ashdod Port Managers

The move comes as part of a probe into the port’s car-import monopoly.

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Antitrust Commissioner David Gilo is considering a proposal to fine the managers of state-owned Ashdod Port for allegedly abusing the port’s monopoly power over car imports.

Gilo said Tuesday he was considering penalties of 200,000 shekels ($57,000) each on Shuki Sagis, a former CEO, and Eli Bar Yosef, deputy CEO for customer services, subject to a hearing. The two are suspected of preventing Haifa Port from competing in bringing vehicles into the country.

If Gilo goes through with the plan, it would mark the first time he has used the power he recently received to impose personal penalties in antitrust cases.

In addition, Gilo has ordered the Ashdod Port Company to a hearing before he decides to declare it a monopoly in unloading vehicles imported from the United States and Europe. The commissioner said he planned to fine the company 12 million shekels.

Importers told TheMarker they weren’t surprised by Gilo’s announcement. “At Ashdod Port they gave us volume discounts and got very angry at any importer who used the services of Haifa Port,” said one, who requested anonymity.

But the port offered carrots as well as sticks, the source said. “They tried to show us how important the car business was to them,” he said. “They don’t call strikes as they do in other areas of port operations. The fact is, most of the time the cars were delivered on time.”

Ashdod Port declined to comment on the accusations, and efforts to reach Sagis failed.

Cars imported from East Asia are ostensibly unloaded at Israel’s southern Eilat Port, while those imported from the West go through the Ashdod and Haifa ports on the Mediterranean coast.

But the antitrust commissioner found that 99% of all the vehicles went through Ashdod from 2009 to 2011. The figure eased to 95% in 2012 when Ashdod’ s car-storage facilities were filled to capacity, causing three importers to begin using Haifa.

An antitrust investigation found that Ashdod Port gave auto importers substantial discounts on port fees for meeting targets for a minimum number of vehicles. In fact, the commission concluded, the targets were aimed at ensuring that nearly all imported cars were unloaded at the port.

Among the importers that signed agreements including discounts was Automotive Equipment Group, which imports Suzukis and Chryslers, Shlomo (Opel), Mediterranean Autos (Fiat), Champion Motors (Volkswagen and Skoda) and David Lubinski (Peugeot and Citroen).

Ashdod Port sought to block a plan by G. Daniel Transport & Port Services to organize angroup of importers to move their unloading work to Haifa, the antitrust authorities suspect. Managers at G. Daniel were pressured by Ashdod Port to work exclusively with them. It was “made clear that its business would be hurt if it didn’t act accordingly,” the antitrust authorities said.

G. Daniel had been retained by a shipping agent to handle the unloading of cars after importers complained that Ashdod dockworkers had damaged vehicles through negligence. But after G. Daniel sought to move unloading to Haifa, Ashdod Port demanded that its own workers be given back the work of unloading vehicles.

However, it soon emerged that part of the work – moving the vehicles to a warehousing area – was being done by a private company, Dana Logistics, controlled by Yaniv Balter, a business partner of Alon Hassan, a powerful port union leader.

Ashdod Port earned about 100 million shekels in each of the last two years. The accusations are serious enough that antitrust officials said they could justifiably impose the maximum penalty of 8% of the turnover involved in the offenses.

But since the law is new, and this is the first time Ashdod Port has been cited, officials said they would settle for less.

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

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