Price controls are ineffective, new antitrust chief says

Israel uses price controls largely to regulate the price of food, but also for products in markets with monopolies, such as cement.

By
June 8, 2016 23:18
1 minute read.
money

Shekel money bills. (photo credit: REUTERS)

 
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Antitrust Commissioner Michal Halperin on Wednesday called for a tougher approach to breaking up monopolies, but she said price controls are ineffective.

“Some 76 percent of the times monopolies were declared over the past 20 years were free of sanctions or enforcement mechanisms and thus did not contribute a thing to advancing competition,” she told the Knesset Finance Committee in her first public remarks since being named antitrust commissioner in January.

The Antitrust Authority already was examining its approach to price gouging and declaring companies as monopolies, Halperin said. Of 14 cases of price gouging that were recently reviewed, four of them in-depth, no enforcement action was taken on any them, she said.

In particular, attempts to control the problems through price control seemed ineffective at lowering the cost of living, Halperin said.

“If you had asked the cellular companies, if they could turn back time, what do they prefer, price controls or competition, I’m sure they would have preferred price controls,” she said.

The cellular reforms introduced by Finance Minister Moshe Kahlon when he was communications minister helped reduce prices dramatically by introducing more competition.

Israel uses price controls largely to regulate the price of food, but also for products in markets with monopolies, such as cement.

Halperin said another important area of focus would be parallel imports, which allow multiple importers to bring in the same products, thereby freeing up a bottleneck in the market.

“The question we at the authority are asking ourselves is how to tackle the high cost of living and not whether to deal with it,” she said.

Setting herself a benchmark, Halperin said the committee should hold her to the numbers and check how much better she has done in the role by the same time next year.

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