In Israel, authorities want to crack down on companies with leading market positions, like Coca-Cola, which they blame for the rising prices in the country.
On Sunday, Prime Minister Benjamin Netanyahu announced he would form a team to tackle the cost of living after criticism that the government neglected the rising prices over the controversial judicial reforms.
The consumer price index in the country has been higher than the target range of 5 percent for several months. The Bank of Israel regularly increases the interest rate to limit inflation.
Not many details have been laid out about the panel to fight inflation other than it would involve the finance and economy ministers.
And Nir Barkat, the minister of economy, repeats he is at “war against monopolies and cartels” (cartels as oligopolistic conglomerates). He plans to submit a bill to force private companies with turnovers of over 300 million Israeli shekels (80 million dollars) to disclose the financial reports for their products with leading market shares, according to Israel National News, a media close to the Ultra-orthodox.
The aim is to know how products are priced and whether companies generate excessive profits from the sales.
In light of the inflation, the minister argues that Israeli markets have suffered from “monopolies and cartels that have been rooted for decades.” He aims to bring more competition to lower prices and threatens companies with criminal liability with the law if they don’t comply with the data requests.
The bill will come after authorities fail to receive food giants’ financial data about their products.
The minister started targeting Coca-Cola by asking the Central Beverage Company, a prominent Israeli manufacturer and distributor of soft drinks, dairy products and alcoholic beverages which holds the Coca-Cola franchise in Israel, to hand over financial reports on profitability to authorities. It came after Coca-Cola Israel announced a price increase of almost 7 percent.
Yet, in March, Finance Minister Bezalel Smotrich had just signed a directive to cancel a tax on sweetened drinks introduced by the previous government. He said the move would be “a significant reduction in the public’s shopping basket.” Ultra-Orthodox Israelis, who tend to have large families and are significant consumers of sugary drinks, perceived the tax was particularly targeting them, according to Times of Israel.
In early May, Yonatan Bezalel, the price controller at the Ministry of Economy and Industry, denounced “a monopoly owner in the cola drinks market” and requested the company to provide detailed financial information, from sales quantities and operational profits to audited financial statements over the past years.
The request was justified by the intent to study the need to control the company’s product pricing.
In Israel, prices of some basic food items, like bread and milk, are controlled by authorities. But Coca-cola is, obviously, not an essential commodity.
Last week, authorities went further and requested 15 food giants to share their financial statements and break down their operational costs and profits. But industry players have argued the request was illegal.
On Sunday, news portal Wallah reported the Central Beverage Company was the first to answer that they didn’t send any financial information, saying the request was illegal and exceeded the Ministry’s authority. The Central Beverage Company is private and doesn’t have to publish its financial data.
For the Manufacturers Association of Israel, the “most predatory monopoly in Israel is the Israeli government. Unlike all other countries in the world, the Israeli government not only makes it difficult to do business, but it constantly raises the prices of housing, cars, fuel, electricity, water, property taxes, products and services in Israel,” the industrial representative stated on May 21.
On Sunday, Mr. Barkat also submitted a bill to the Knesset, Israel’s Parliament, to reduce importers’ portfolio and their bargaining power, considering suppliers have too much power and dictate prices. It revives his plan from January to force large importers to be able to import products from only one large corporation.
The Ministry of Economy also launched a communication program titled “Not loyal to the brand — loyal to the price!” with a website providing information on prices for food shopping baskets with well-known brands and alternative products.
According to the ministry’s shopping basket, the one with premium brands may cost 19 to 32 percent more than with substitutes, depending on the retail chain.
“It’s time to stop paying a high price for brands. Buy smart and cheap,” said Director General of the Ministry of Economy and Industry, Amnon Merhav.
But it’s unsure whether any of the two bills would pass.
January’s project to limit the business operations of importers was removed by the Ministry of Finance, which had announced instead a public committee to examine measures to dismantle monopolies and food giants.
