Small Businesses in Israel Are Picked On, While Big Corporations Aren't Confronted

An aerial view shows the newly arrived foundation platform of Leviathan natural gas field, in the Mediterranean Sea, off the coast of Haifa, Israel January 31, 2019.

The Israel Competition Authority, a government agency employing 150 people whose job is to increase business competition, facilitate fair trade and reduce the cost of living, has chosen for the past few years to throw the book at small businesses while avoiding confrontation with big corporations. That’s one of the main reasons the cost of living in Israel is 20 percent above the average for developed countries, according to the Knesset economics department.

The 2018 annual report of the antitrust agency, which is headed by Michal Halperin, makes this clear. In the chapter on cases the authority investigated we read about the “tree-trimming cartel,” in which gardening subcontractors coordinated bidding for municipal contracts; about the “laundry cartel” and the “book cartel.” The report also cites investigations into the organizers of high school trips to Poland, sellers of cooking gas, the “water meter cartel” and the “taxi case,” in which the taxi drivers’ union recommended that drivers not give discounts to passengers traveling to Ben-Gurion International Airport.

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These are all worthy investigations, but what stands out is the paucity of probes of big, wealthy and influential companies in areas with a small number of players and low competition, resulting in high prices. The authority hasn’t declared the banks a concentration group, a type of partial monopoly, even though a parliamentary inquiry committee recommended that it do so. The authority hasn’t looked into the natural gas market and the activities of the natural gas monopoly, even though the two major sources of natural gas, the Tamar and Leviathan offshore fields, have the same owner. Last week the authority refused to declare exclusive importers to be a monopoly even though they may hold more than 50 percent of the market for various products. Diplomat, the importers in Israel of Gillette shaving products, holds more than 90 percent of that market.

Halperin isn’t the only one vigorously enforcing the law against small and midsize players, while showing tolerance and understanding for large companies. This is also how the Israel Securities Authority, the Israel Tax Authority, the Bank of Israel’s banking supervision department, the Standards Institution of Israel and the Environmental Protection Ministry behave. That’s because big corporations have batteries of lawyers and economists that undermine the authorities’ confidence in their ability to file charges and make them stick. There are also inspectors with an eye to the days after their public service who are reluctant to confront any company that might be a future employer.

Confrontations with tree trimmers, laundries and book suppliers won’t harm anyone’s career; confronting the banks, the gas monopoly or vehicle importers will. That’s why the Israel Competition Authority must be headed by a person who sees reality through the eyes of the consumers, and not an antitrust lawyer in private practice.

The above article is Haaretz’s lead editorial, as published in the Hebrew and English newspapers in Israel.