"Unfair influence on the Israeli market": Following the increase in prices At the same time, the Consumer Protection and Fair Trade Authority announced for the first time on Wednesday its intention to issue an administrative order to stop infringement to the three soft drink companies that control the beverage category: The Central Company for the Production of Soft Drinks Ltd. (Coca-Cola), Tempo and Jafora-Tabori. At the request of the Consumer Protection Authority, the companies must restore the price immediately if the price has already risen and cancel the planned price increase.
According to the Authority, the companies' decision to raise the prices of their products at the same time, when all three control the vast majority of the beverage market (including mineral water), harms consumers' freedom of choice. Thus, consumers are forced to purchase the products despite the price increase, which constitutes an unfair influence on the Israeli consumer.
May receive fines, Central Beverage Company (Coca-Cola), photo: PR
Regarding the significance of this step, the Authority requires the companies to cancel the planned price increase, if there was one in practice, and to provide documentation within 14 days attesting to its implementation. If this does not happen, it will be possible to give companies fines or take criminal action.
Due to a violation of the provisions of the administrative order to stop a violation, a monetary penalty of three times the amount of the monetary sanction will be imposed for the violation, or alternatively, criminal proceedings will be taken. Companies have one week to appeal this step and can choose for the Magistrate's Court to decide on this issue.
These are companies that market and sell a variety of drinking products including carbonated drinks, soft drinks, alcoholic beverages, water and more. Over the years, the companies have become dominators in the category and a significant and powerful factor in the field of soft drinks, some of them in a variety of beverages. According to the Authority, these actions of the companies constitute an unfair influence on the Israeli consumer, and hence the Authority can issue an administrative order to stop infringement, i.e., price increases.
According to the Authority's position, the companies' decision to raise the prices of their products at the same time, when all three control the vast majority of this market, harms consumers' freedom of choice, in that consumers are forced in practice to purchase the products despite the price increase. This, according to the Authority's position, constitutes an unfair influence on the Israeli consumer.
The Consumer Protection Law prohibits unfair influence, such as the prohibition of repeated communication with the consumer. The authority now thinks that price increases for beverage companies can also fall under this definition because companies that control 90% of the market cause unfair influence by raising prices one after the other while the consumer remains bound by this market. However, it is quite possible that additional categories will join.
The Authority says that another unique violation of the Central Company for the Manufacture of Soft Drinks (Coca-Cola), which over the years has become a significant and powerful factor in the field of soft drinks, through a variety of actions, some aggressive, taken to promote its products in the market, the practical and cognitive influence of the company on the consumer, harm the consumer's ability to choose and his freedom of communication.
As stated, during March-April 2023, the companies simultaneously announced an increase in the price of various soft and carbonated beverages produced by them. The three companies dominate the soft drinks category absolutely. The companies issued a similar announcement about raising the prices of their products, a move that led to an increase in the prices of these products on the part of all the companies.
Anita Yitzhak, Deputy Commissioner of the Authority and Head of the Investigations and Intelligence Division, said: "The Authority will not allow companies to exploit their power and leave the consumer without freedom of choice. These companies control the soft drinks category completely, and by raising prices at the same time, almost completely closed all options to the consumer and harmed the consumers' freedom of choice, as a result the consumer had no choice and consumers were forced to purchase the companies' products despite the price increase. In the Authority's view, this is an unfair influence on consumers, and the law gives the Authority tools to deal with this violation, and we did. The Authority continues to constantly examine the activities of the various companies, particularly the price increases, and is examining whether there are additional cases that violate the law and require its intervention."
Economy Minister Nir Barkat: "The move by the Consumer Protection Authority in the Ministry of Economy joins our measures against monopolies and cartels that have become accustomed to having a state and that it is possible to oppress the public without a problem. Those days are over. My policy is clear: it is impossible to harm the citizens of Israel, raise prices without recognition and oppress the public. The Economy Ministry will use all the tools at our disposal to fight monopolies and cartels that oppress the public and raise prices for no reason and treat the people of Israel like a cash cow."
The Central Soft Drinks Company said: "The request by the Consumer Protection Authority appears on its face to be baseless, lacks any factual or legal basis, and clearly deviates from the scope of the authority and activity of the Consumer Protection Authority."
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