Owner of supermarket chain Rami Levy forcibly removed from Knesset Economic Affairs Committee contentious hearing on the cost of living
The Knesset Economic Affairs Committee on Wednesday held what became a combative hearing on the issue of high prices in Israel’s marketplace.
Photo by Hillel Maeir/TPS
The hearing was held a day after Israel police raided the offices of two major companies suspected of price-fixing and at a time when the Israeli media reports on a regular basis on how the average product, from toiletries to packaged foods, costs more in Israel than in most of Europe.
The CEO of Shufersal, Israel’s largest supermarket chain, attended the hearing as did Rami Levy, the founding owner of a supermarket chain known for offering discounted prices that bears his name. Things got out of hand at one point and Knesset security had to use force to remove Levy who refused to leave after he was expelled from the meeting.
TPS reported on Tuesday that two of Israel’s largest companies, The Shufersal supermarket chain and the Strauss food production company known largely for its dairy products, are currently under investigation for price-fixing schemes. Officials from Israel’s Competition Authority raided the offices of the two companies in Tel Aviv on Tuesday, confiscated numerous documents, and interviewed executives.
Other retailers in Israel are also under investigation.
Rami Levy was himself questioned on Wednesday in the matter.
The raids took place just a week after it was revealed that the Shufersal company offered special discounted prices to Israel’s ultra-orthodox community. This was not done in the open, through lower prices at branches in areas with high ultra-orthodox populations. Rather, the discounts were given behind the scenes through special websites.
During the debate, Committee Chair MK Biton demanded to know whether the retail chains coordinate prices. A combative Shufersal supermarket chain CEO Itzik Abercohen, who was accompanied by a legal advisor from his company, replied: “Tell me, are you people normal? I’m answering your question – no.”
Abercohen also claimed that he had done the “most socialistic work in Israel” in regards to Shufersal’s prices.
Biton said, “This is a difficult morning in the State of Israel … The Economic Affairs Committee, which I head, has repeatedly said that prices in Israel will not go down and the cost of living will not change unless we deal with the top of the food chain.”
Chairman Biton complained that, in his opinion, the Competition Authority did not act fast enough. “Over the past few years, we have not seen such determined actions of the Competition Authority and the Ministry of Economy. They have to wake up at once and handle this on a weekly basis,” he said.
Bat-Chen Rothenberg, an economist in the Knesset’s Research and Information Center, presented data indicating a slight decrease in the market share of the large suppliers, alongside an increase in market concentration and in the market share of the five largest food companies.
Acting Competition Authority Director General Michal Cohen said the investigation began before the committee meeting was scheduled. She refused to address the allegations or provide any details of the investigation, but said she plans to present to the committee more legislative amendments “that will make it possible for the Authority to deal with the cost of living.”
When asked why the supermarket chains should not agree to a price freeze, an angry Rami Levy responded, “Then freeze the property tax and the price of electricity as well.” Levy also said that the government was responsible for the high prices.
Abercohen said Shufersal’s profit margin is the same as that of other supermarket chains around the world.
When Biton and MKs Ram Shefa (Labor) and Ofir Sofer (Religious Zionism) asked Levy to reveal his supermarket chain’s gross profit margin and accused him of deceiving the public, he responded by saying that he did not even know who Shefa and Sofer were. He also derided Sofer calling him a populist. This is what led to Levi’s being expelled from the room. When giving the order, Chairman Biton, referring to Levi’s wealth, declared, “You will not speak disrespectfully like that here and it doesn’t matter who you are or how much you are worth.”
At the conclusion of the hearing MK Biton declared that competition laws would be enforced more strictly than they have in the past. “If anyone thinks this investigation will end with fines of NIS 50 million and an indictment for someone, they are wrong,” he said. “The committee will not allow it anymore. We will investigate matters and check with the competition authority every month to see if there is a need to declare someone as a monopoly or cartel.”
Levi also called on the Ministry of Economy to present detailed plans for dealing with the cost of living during an upcoming meeting with the committee with the participation of Minister of Economy Orna Barbivay.
