Have some of the senior executives of the food industry turned public statements into a method to signal to competitors when it is appropriate to raise prices? (Photo: ShutterStock)
These days we were informed that the Competition Authority is close to filing charges against leading retailers and suppliers in the food market.
At least from what we read in the media, some of the suspicions are related to public statements that could harm the competition.
It is very important to enforce the competition law against such public statements.
For example, if a retailer or supplier says publicly (interview, conference, etc.) that they intend to raise prices, this may signal to competitors that they can raise prices as well.
If the retailer or supplier had said this to their competitor in a closed room, it would have been an offense of (at the very least) attempting to make a binding arrangement.
This is a serious criminal offence.
The reason for the ban is that this kind of talk helps competitors solve a coordination problem, on the way to uncompetitive pricing at the expense of the consumer.
If the supplier or retailer does this publicly, they solve the coordination problem to the same extent.
If we allow these public statements, it is quite clear that suppliers and retailers will harm competition through public statements, rather than meeting in a closed room.
It is necessary to attribute to that supplier or retailer the intention to achieve the reasonable results of his actions, including the above-mentioned non-competitive result, and therefore in my opinion there is an offense here.
This is even if the supplier or retailer has innocent explanations of this and that why he or she said this. Even if the words are said to an anonymous journalist, and the journalist publishes that a "senior supplier" or a "senior retailer" intends to raise prices, the damage is similar, and this deserves investigation.
About the earthquake in the food industry in Israel
- https://finance.walla.co.il/item/3546585
Shufersal vs. Unilever war.
One of the wars waged by the chain recently against price increases.
Consumers should have given greater backing (Photo: none)
Consumers had to get behind Shufersal
The same goes for other problematic statements by suppliers and retailers that I have read in the media in recent years, such as "If my competitor raises prices, I will also raise prices", or "If my competitors lower prices, it will not be profitable for them, so it is hard to believe that they will do it", etc. in these
In recent months, the media has been interested in the suppliers' renewed attempts to raise prices.
This time, one of the interesting phenomena was that retailers such as Shufersell themselves tried to prevent the price increases.
It is a welcome initiative by Shufersal to use its power vis-à-vis the powerful suppliers to prevent price increases, provided that Shufersal does not use the opportunity to raise the price of its own brand.
In this context, there was a problematic public statement by another large retailer: he said in an interview with the media that Shufersal would surely break if a significant number of suppliers insisted on raising its price.
Again, this is a statement that harms competition, and in my opinion, an attempt at an illegal binding arrangement.
If the same retailer were to say this in a closed room, where Shufersal and those suppliers are, the same retailer tells the suppliers that if they all insist on raising the price, Shufersal will go broke, and tells Shufersal that it should agree to the increases.
These are statements that also justify an indictment.
Consumers too, and not just the other retailers, have a role to play here: if consumers had supported Shufersal's initiative to refuse price increases, instead of switching to purchasing their favorite brands at a higher price from other retailers, perhaps Shufersal would not have gone bankrupt.
When Shufersale was broken, it seems that all the suppliers, one after the other, feel that the way has been opened for them to increase the price as they wanted for a year.
Thus, after Tanuva partially broke Shufersal, Strauss came and also announced a price increase.
Here, too, consumers could have played a role: they got used to not purchasing many Strauss products because of the salmonella crisis.
They could have organized, for example on Facebook, and as one person continue to refuse to purchase Strauss' products, this time because of the price increase.
This would have prevented the Strauss price increase, and the domino of price increases by other suppliers that followed.
The author is Professor David Gila, Tel Aviv University, former Antitrust Commissioner
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Prof. David Gila, during his tenure as Antitrust Commissioner (today the "Competition Authority") (Photo: Noam Moskovitz)
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