Knesset to Discuss Canceling Airlines' Antitrust Exemption

Kan: "Consumer issue of the highest magnitude"

The Knesset Finance Committee is expected to discuss a proposed change to the Restrictive Trade Practices Law today, which will apply antitrust law to the aviation industry, too, as part of the Economic Arrangements Bill.

For now, the airline sector enjoys an exemption granted in 1961. At the time, the antitrust exemption was meant to equate Israeli law with that in the Western world; but times have changed, and the aviation industry has become competitive in most developed countries - and only Israel has remained without any supervision over airline competition.  
As a result, agreements between Israeli and foreign airlines cannot be examined by the Antitrust Authority, and it is impossible to know if they have led to increased ticket prices.

The proposed change in the law is meant to end this situation. "This is a consumer issue of the highest magnitude," Antitrust Commissioner Ronit Kan told TheMarker. She explained that the present situation prevents the Antitrust Authority from even examining aviation industry agreements. "Even if on a certain route only two airlines are allowed to operate, and they come to an agreement between them not to compete, such as in an agreement where one will not fly the route in return for a fee, the agreement is legal and we cannot even examine if there is any advantage to such an agreement," Kan stated.

Kan said that since costs apply to both passenger and cargo prices, the matter has a huge consumer and economic influence.

Lobbyists acting on behalf of the airlines have tried to convince MK?s to object to the change for technical reasons. The lobbyists claim that the Economic Arrangements Bill is not the place for such a proposal, and therefore debate on the matter should be postponed. El Al has also claimed that it has to deal with a very heavy security burden, and the exemption from antitrust law is a means of compensation for this.

Kan added that under the proposed change, she could still approve a code-sharing agreement, if she felt that it did not harm competition. In addition, her decisions could be appealed in court. Kan also proposed that the foreign minister and transportation minister be allowed to approve agreements if their cancellation would seriously harm Israel's foreign interests.