For three years, Antitrust Commissioner David Gilo has been hesitant about doing his job. He saw how a terrifying monopoly in the natural-gas market was being formed before his eyes, but feared to exercise his authority and take steps against this monopoly.
At first, Gilo hoped the Finance Ministry would impose price controls on natural gas and thereby pull his chestnuts out of the fire. But that hope proved to be in vain. Then he hoped the Energy and Water Resources Ministry would throw him a lifeline, by authorizing an increase in the supply of natural gas and thus buying the Antitrust Authority time to wage a battle to rein in the monopoly and its control over the enormous Leviathan offshore field. But there, too, he received a cold shoulder. Finally, he sought help from the politicians, hoping the cabinet ministers would support him in his battle. But he soon discovered that the cabinet, too, had left him alone on the battlefield.
So in the end, Gilo capitulated to the threats of a natural-gas shortage, to the pressures of the Delek and Noble Energy partnership, which controls all of the reserves of natural gas reserves off Israel’s coast, and their warnings of a lengthy legal battle if the authorities tried to hinder them. A year ago, Gilo reached a compromise with Delek and Noble that perpetuated their monopoly in exchange for the promise of a utopian future that had no chance of materializing, in which competition would be created and prices driven down as a result of the sale of the tiny Tanin and Karish gas fields. In the wake of this decision, Gilo came in for searing public and parliamentary criticism.
Nevertheless, Gilo was revealed on Monday as a courageous regulator when he withdrew from the compromise agreement that he himself cooked up. Only a brave public servant would be willing to listen to criticism and change his mind after having made a decision on which he had placed the full weight of his professional prestige. Only a brave regulator could make a portentous macroeconomic decision in full knowledge that this would result in an extremely difficult legal battle, on his watch, against parties flush with money, influence and connections.
Regardless of the outcome of Gilo’s move, by deciding to declare the Leviathan partnership a cartel that operates in restraint of trade, he proved that the Antitrust Authority is worthy of the public’s trust. The authority, and Gilo as its head, must continue to seek to dismantle, or at least rein in, the natural gas monopoly and to encourage competition throughout the economy.
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