After a marathon 12-hour debate, the Joint Economics-Finance Committee for the Promotion of Competition in the Food Sector, chaired by MK Avishay Braverman (Labor), last night passed a bill to promote competition in the food industry for its second and third Knesset plenum readings. On Tuesday night, the committee approved the bill sponsored by Braverman and MK Yitzhak Vaknin (Shas), which places additional restrictions on large companies with annual turnovers of more than NIS 1 billion, and limits their shelf space to 50% of the space at a supermarket chain.
The committee also approved the bill's transparency chapter, which requires supermarket chains to report prices of products in real time, in order to make price comparisons efficient. The committee also approved sections which will give the Antitrust Authority the power to prevent supermarket chains from opening new branches and even order the sale of branches in neighborhoods and locations where there is no local competition.
The main restrictions on the large food companies and suppliers will come into effect on January 15, 2015.
In previous discussions, the Joint Committee for the Promotion of Competition in the Food Sector approved a proposal by Braverman to ban payments for allocating sale space to large suppliers, which will not be allowed to buy shelf space or make other payments that will push aside small suppliers. The committee also banned large suppliers and retailers from intervening in the placing of products. Large suppliers will be banned from setting recommended retail prices, to prevent a situation in which a large supplier sets a price that becomes the maximum price, thereby preventing small suppliers from competing.
The bill bans pricing and predatory links, in order to restrict the big suppliers from making the sale of a leading product to stores subject to the purchase of a product with lower sales, or the sale of a product for less than the cost of supplying it to the retailer (loss leader). The Antitrust Authority was also given the power to issue directives to a large retailer concerning its own brand if there is concern about harm to competition.
Braverman announced that he intends to establish an Economic Affairs Committee subcommittee to monitor implementation of the law and the situation on the ground, and to nominate MK Yakov Asher (United Torah Judaism) to head it. In addition to the bill, Braverman has also sponsored a clause requiring the minister of the economy to report to the committee six months after the law comes into effect, and once a year thereafter, on the implementation of the law's provisions and its effectiveness in increasing competition and lowering prices.
Published by Globes [online], Israel business news - www.globes-online.com - on March 5, 2014
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