Antitrust Boss Cracking Down on Competing Companies' Investments

Crackdown may prevent companies from forming cartels, raising prices and harming consumers; Gilo also taking a stance on monopolies.

New Antitrust Commissioner David Gilo has been changing the Antitrust Authority's focus in his first month on the post: The authority will be investigating every investment that a company makes in a competitor, even if the investment is small, said internal sources.

Furthermore, players in highly concentrated markets will be forbidden from investing in competitors outright, due to concerns that such investments could hurt consumers, said the sources.

Until now, the authority had focused on mergers or purchases of more than 25% of companies.

Gilo's new initiative means the authority will examine the car importers' investment in the Carasso Group, as well as the grocery stores' investment in the Victory supermarket chain. None of the companies bought more than 25% of either Carasso or Victory.

Carasso, the local importer of Reault and Nissan, recently went public. Buyers included Toyota importer George Horesh and Seat importer Allied Holdings. Israel's car market is considered quite concentrated, and Gilo intends to have the Antitrust Authority investigate whether these purchases damage consumers.

Meanwhile, when the Victory supermarket chain went public, buyers included supermarket companies Blue Square and Neto.

By buying a stake in a competitor, the companies gain access to the competitors' shareholders meetings, where financial information is revealed. This may enable the companies to form a cartel, raising prices and harming consumers, antitrust sources say.

Gilo has also taken a stance on monopolies, and has advocated increasing enforcement of companies that take advantage of their monopolistic positions by hurting competitors and raising prices beyond reasonable levels.