The Haifa and Ashdod ports represent an oligopoly in the provision of loading and unloading services of shipping containers on sea cargo lines, Antitrust Authority director Dr. David Gilo has decided, after a hearing that he held for the port companies.
The declaration of an oligopoly is a precedent setting step by the antitrust regulator. Its aim is to authorize him to give directives to the port companies in order to avoid harm to the public or to competition, or to create conditions that will boost competition. The main directive that Gilo intends to publish is a prohibition against the existing port companies operating the future ports that the government plans to construct, which will block a possible demand from the port workers to take control of the new quays that will be built, preventing their privatization.
In addition, Gilo writes, "I intend to order the port companies not to take any action that could frustrate, interfere with, or cause difficulty to the entry into the market or the activity of an additional operator of the Bay Port (the planned port in the Haifa bay, A.B.) or the South Port (the port planned alongside the Ashdod Port, A.B.).
The regulator stated that his decision was made "in the light of the great importance of the port services market to the Israeli economy and the fear of damage to competition in the expected construction of new port terminals." Gilo said that, for most port services customers in Israel, Haifa Port could serve as an alternative to Ashdod Port, and vice versa, but that besides these two ports customers had no real alternative of transporting goods by land or via Eilat Port. He determined that "little competition" existed between the ports because of high barriers to transfers between them, the fact that the market segments of the two companies were "very similar" and that they provided similar services to a large number of customers.
Sources close to the Histadrut (General Federation of Labor in Israel) said that the Antitrust Authority director's decision was further intervention by the regulator in the negotiations between the state and the workers with the aim of assisting the state to attain its objectives. The Ashdod Port Company argued at the hearing that it would be at a disadvantage in competition with the new private port because it would not have the infrastructure required for loading and unloading the largest container ships.
Published by Globes [online], Israel business news - www.globes-online.com - on November 27, 2013
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