A joint committee consisting of members of the Finance and Economic Affairs committees began to debate on Monday a government proposal for increasing competition in the food industry by implementing the recommendations of the Kedmi Commission. At the beginning of the meeting the committee decided to merge two additional consumer-related bills. One of the bills, submitted by MK Ayelet Shaked, obligates chain stores to publish updated prices of their products on the Internet. The second bill, initiated by MK Nachman Shai, calls for the creation of a database that will include prices of products sold by chain stores.
Finance Minister Yair Lapid told the meeting that ”the important (draft) law to increase competition in the food industry will allow us to reduce food prices. We will not spare any effort to lower the cost of living – all means are legitimate to lower the cost of living.” Lapid noted that the average Israeli household spends NIS 2,250 a month on food (16% of its total expenses).
”If we manage to lower the prices to the OECD average, every household will save NIS 340 a month,” he said, adding that up until eight years ago food prices in Israel were below the OECD average. Lapid mentioned that prices were lowered for a short period of time during the social protest period. He said there were a number of reasons for the sharp rise in food prices, including the collapse of Club Market in 2005 and the sale of Tnuva to 2006 Apax Partners Worldwide in 2008.
According to Lapid, the draft law is meant to deal with the over-concentration of chain stores in certain areas, help small and medium-sized suppliers gain better access to shelf space in chain stores and increase transparency in a way that would allow for more efficient price comparison.
Economic Affairs Committee Chairman MK Avishay Braverman noted that ”the social protest began when one man opened a Facebook group when he was fed up with paying NIS 8 for (a 250-gram container of) cottage cheese. I believe there is a great question mark as to whether the bill will really lead to the reduction of prices.” The chairman said the increase in the price of food hurts the weaker segments of society and the lower middle class more.
David Gilo, the director general of the Israeli Antitrust Authority, said he believes the draft law would promote competition in the food industry, adding that prices are lower in areas where there is competition between retailers.
Amir Hayek, the director general of the Manufacturers Association of Israel stated that the food industry does not oppose the draft law, but warned against hurting an industry that employs 63,000 people in 1,500 companies.
MK Ofer Shelah told the meeting that the ultimate goal is to lower the price of food and that the law was just the beginning. He said that beneath the surface there are signs of collapse and that the goal is to reach a solution before the collapse takes place. MK Gila Gamliel, on the other hand, said she doubted the legislation would yield significant results. ”The main problem is being set aside, and instead we are dealing with shelves and branches,” she said. MK Yitzhak Vaknin said prices increased because supervision was lifted. Therefore, he said, supervision over basic food products must be reinstated. MKs Michal Rozin and Yakov Asher also called for increased supervision on food prices.
Eyal Ofer of the ”Israel is Dear to Us” organization told the committee members that a drop in food prices would lead to greater demand, and ”when the demand goes up, you need more workers.”
Chairman Braverman concluded the debate by declaring that the committee plans to advance the bill in such a way that it will have clear goals and real enforcement tools, so that it will lead to an actual drop in food prices. He said the committee will work to have the legislation passed as soon as possible.