Grant for Pri Hagalil Would Illicitly Boost Sector's Largest Player, Says Competitor

The owners of the the Hatzor Haglilit factory have repeatedly threatened to shut the plant if they don't receive a NIS 18 million grant they say they were promised by the state.

The government's plan to create a special law to enable a NIS 10 million grant for embattled food processing company Pri Hagalil is inappropriate intervention on behalf of the sector's largest player, a competitor wrote to the attorney general.

Sanlakol CEO Pinhas Gurevitch told Yehuda Weinstein that his company would petition the High Court of Justice if the government didn't drop its plan to give his competitor money if it did not shut down its Hatzor Haglilit factory.

An employee at work at the Hatzor Haglilit factory two weeks ago - Alex Levac
Alex Levac

The plan discriminates against Pri Hagalil's competitors, including his own company, he said.

The Hatzor Haglilit factory has been at the center of media attention for the past few years. The owners have repeatedly threatened to shut the plant if they don't receive a NIS 18 million grant they say they were promised by the state. The government says no such promise ever existed. Meanwhile, the 200 or so workers have protested against layoffs, saying most are elderly, unskilled and unlikely to find new jobs.

Pri Hagalil's owners had wanted to shift the factory's operations to their Nahariya plant as part of an efficiency plan.

About 10 days ago, the finance and industry ministries drafted a plan to enable NIS 10 million grants for factories in poor towns with few employment options. This would apply to plants that had nearly closed down and had at least 100 employees before the 2008 crisis. All this describes the Hatzor Haglilit factory.

Eligible towns were defined as Katzrin, Migdal Ha'emek and Yeruham, as well as any other towns the finance and industry ministries deemed in need.

Gurevitch argued that Pri Hagalil had been bought by its current owners as part of a court-supervised tender, and that four parties had bid.

"Retroactively changing the tender in order to change the terms for the group that won seriously damages the entire process," he wrote.

Pri Hagalil is one of the country's two largest preserved and frozen vegetable companies, and giving it favorable treatment "directly damages all the factories in the sector," leads to layoffs and creates unjust competition, Gurevitch said.

"I don't believe that the solution is to push off the problem (if a problem even exists ) onto the other factories due to media pressure that lacks true economic justification," he said.

Pri Hagalil is partly owned by the owners of the Hatzi Hinam grocery store chain, who own a chain of food companies including Vita, Milos and the Binyamina Winery, which means they have considerable strength, Gurevitch said.

Over the past two years, the group's products have sold for some of the lowest prices in their categories, he added. They were sold under their own brand names as well as the store brands of Super-Sol, Mega and Hareshet Hareviit, a brand owned by supermarkets including Rami Levi.

The factory's owners had said their profit levels were low - although at least they were making profits.

Three years ago, Pri Hagalil received a NIS 10 million loan that became a grant, Gurevitch noted. Last year, the company launched an expensive TV advertising campaign that increased its market share, forcing Sanlakol to lay off 10% of its workforce, he added.

All the companies in the sector are in the country's outskirts, and all have around the same number of employees as Pri Hagalil.