In a discussion held by the Knesset Finance Committee on the high cost of living at the opening of the winter session today, Antitrust Commissioner Prof. David Gilo placed some of the responsibility for the high cost of living on the public. He said that part of the problem is that consumers are willing to pay high prices: “We pay for mistakes that were made decades ago, but, since the summer of 2011, there has been a shift in perception, and everyone cares about the issue, and things are being done: the food law, strengthening antitrust, reducing barriers on imports, and other change-inducing steps to reduce the high cost of living. There are many causes for the high cost of living: high manufacturing costs, monopolies, lack of competition, but also the willingness of consumers to pay a high price.”
Gilo says that the Antitrust Authority is trying to fight the obstacles, but demands the cooperation of consumers: “Organized boycotts are a welcome phenomenon that can curb the rises in prices. Occasional boycotts are insufficient. Consumers must implement their personal boycotts every day; they must vote with their feet and compare competing prices. The consumer must look at the entire bill - not just at the prices of specific items. The consumer must look at the other shelves and give other products a chance, not just the leading brand.”
Nonetheless, Gilo says that the government has instruments with which to influence prices: “Taxing profits, instead of operations, because if operations are taxed - the tax is passed on to the consumer. If it’s profit, it is passed on to the shareholders, who will earn less. Barriers to competition that the government itself created must be lifted, and competition between companies must be encouraged. Import restrictions must be cancelled, as well as high-kashrut standards (strict adherence to Jewish dietary laws) that prevent new products from entering the market, licenses and franchises. Some of these steps have already begun, such as the Law of Concentration, and Food Law.”
Gilo also addresses the matter of concentration and said: “A trend of change is underway, and today the State has an obligation to consider matters of concentration when giving licenses and franchises, there is an obligation to consult the antitrust commissioner, but there are still forces that prevent change; committees of government monopolies that act to fortify the monopoly at the expense of the consumers. Stability considerations also adversely affect matters, when regulators prefer strong players and prevent additional players from entering the market, which makes competition more difficult in the financial markets, banking, insurance, and pensions.”
MK Shelly Yachimovich (Labor) attacked Gilo for his conduct with regard to natural gas, and said: “You say all the right words, you create an impossible struggle with the monopolies, but you seem to me to be someone who sweeps leaves, and doesn’t dig wells.” Meretz Chair MK Zehava Galon said: “The government must change its policy and take only populist steps, like 0% VAT. The Antitrust Authority is taking steps, but really cannot act alone. Perhaps we need to change our conception of cronyism, and kickbacks for the wealthy. We must decide upon 3-4 issues, and focus on them. All the commissioners and regulators must work together. All the government initiatives thus far have been initiative for public relations - not for the benefit of the citizens.”
Published by Globes [online], Israel business news - www.globes-online.com - on October 27, 2014
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