"The dairy market could be a candidate for declaring an oligopoly," Antitrust Authority director general David Gilo told “IDF Radio" (Galei Zahal) today. He spoke after the Knesset Economic Affairs Committee yesterday unanimously passed a watered down version of a government's Antitrust Bill - Consortiums, an amendment to the Antitrust Law, to limit the power of oligopolies in the economy.
In an interview with "Globes", Gilo responded for the first time to the consumer boycott being organized against food products, and to remarks by a retail executive to "Globes" yesterday there was a coordinated silence in the food market. Gilo told "Globes", "This is a kind of apathy by the Israeli consumer. The general impression is that the Israeli consumer does not conduct market surveys, is not prepared to make an effort to compare competing offers or to go buy at the cheaper alternative."
Gilo added, "If a retail chain next to home charges a significantly higher price for a basket of products than a retailer 15 minutes drive away, drive, and vote with your feet. Consumers should vote with their feet, and buy where it's cheaper, and should check themselves where it's cheaper. This will restrain retailers and suppliers from raising prices."
Gilo said, "The consumer stands helpless against the big suppliers. The organizing of private consumers is a welcome thing; it prevents discrimination against them, and can crush the power of the big suppliers. In many markets, suppliers only give discounts to large business customers. This is a bad thing that harms private customers. The organization of private customers will crush the power of the big suppliers and they will have to give discounts to everyone. They give discounts to the big companies anyway, and they will give them to private persons because otherwise they'll organize boycotts against them. It's impossible to do this in electricity, and harder to do it with fuel, because these are essential goods, but for products with alternatives, it can deliver worthwhile results."
"Globes": Are consumer boycotts legal?
Gilo: "It's a welcome phenomenon that consumers are organizing, and it does not break the law. There are legal methods in which a consumer boycott might be illegal under antitrust law. In Israel, business customers are forbidden from organizing, but it's permissible to gather private consumers."
As for the Antitrust Authority's responsibility to solve the issue, Gilo says, "This result in which one party raises prices and a second party later raises prices, and then a third, whether they are retailers or suppliers - if there is no communication, not even the wink of an eye, between them, then current law offers no tools to deal with this. If one of them says in a newspaper interview, 'I suspect that my competitors should raise prices'; this can't go on. This is the wink of an eye.
"We obviously don’t exempt ourselves from responsibility, because we are responsible for maintaining as much competition as possible between firms in the market. The creation of competition between firms and consumers emerging from their apathy are complementary processes. The Antitrust Authority's job is to foster as much competition as possible."
In practice, reality proves there is no competition.
"The tools we have are to fight the cartels and oligopolies of firms that harm competition, to prevent mergers, and to supervise monopolies that harm competition. The bill that the Knesset Economic Affairs Committee approved last night enables to locate a market with little competition, declare an oligopoly in it, and give the firms in it directives to increase competition."
Will you take action about food?
"I don’t want to comment about what we'll do in the future, but as soon as the legislation is completed, we'll hit the road and locate the most problematic markets where we have the most tools to solve the problem. The food market is in the news, but that does not mean that we'll necessary start there."p
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