Yishai calls on A-G to investigate price fixing claims

As Facebook consumer boycott gains steam, interior minister calls to probe "if business leaders are conspiring behind backs of citizens."

By NADAV SHEMER
June 16, 2011 19:06
3 minute read.
cottage cheese

cottage cheese 311 R. (photo credit: Marc Israel Sellem)

 
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The Facebook-inspired campaign against the rising price of cottage cheese continued to gain steam Thursday, as Interior Minister Eli Yishai called on Attorney-General Yehuda Weinstein to open a criminal investigation into claims of price fixing.

“It is worth checking if business leaders have been conspiring behind the backs of ordinary citizens. It is inconceivable that young couples would think twice before buying cheese for their children. It would be worth carrying out a quick investigation into the matter,” Yishai wrote in a letter to the attorney-general.

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By Thursday afternoon, almost 70,000 Israeli consumers had backed a Facebook campaign launched two days earlier to protest the rising price of cottage cheese – one of the staples of the local diet. The campaign, which was initiated by Facebook user Itzik Elrov, calls on consumers to refrain from purchasing cottage cheese produced by Israeli manufacturers Tnuva, Strauss and Tara during the entire month of July.

“Cottage cheese, a product so basic, yet its cost has risen to close to NIS 8. We won’t buy it for an entire month,” the page declares.

The campaign continued against the backdrop of conflicting sales claims.

While supermarkets were reporting a 25-50 percent increase in cottage cheese sales due to bargain offers, an investigation by Globes found that many retail chains were actually recording a fall in sales. The investigation found that special offers such as “buy one, get one free” were increasing quantities sold, but not turnover at the tills.



Finance Minister Yuval Steinitz responded to the campaign late Wednesday, saying that so long as there exist cartels and monopolies that prevent open competition, he has no intention of approving lifting price controls on dairy products.

“There is a need to consider the importation of cheese and dairy products. That is the best way to bring down prices,” Steinitz added. He was speaking at a ceremony at Ariel University Center of Samaria, where he was being honored for his role in helping Israel survive the global financial crisis.

Meanwhile, the Manufacturers Association Director of Economics and Research Strategy, Daphna Nitzan-Aviram, said her organization did not take seriously reports of price-fixing, and said that the rising global cost of raw materials was behind the rising in-store price of food products, such as cottage cheese.

“It [the Facebook campaign] makes for nice headlines in the newspaper, but at the end of the day, when companies’ costs rise over the longterm, it is clear that they will hand over those costs to the consumer,” Nitzan-Aviram said, listing water and gasoline as commodities that have become more expensive. “In the end, it is obvious that nothing will be sold at a loss. And there are no free meals when the costs go up.”

She made the comments at a panel on the state of the economy hosted by The Jerusalem Post in Tel Aviv on Thursday.

Nitzan-Aviram also suggested that the same population campaigning against rising prices might also “be harming itself,” given that recent confirmation of a rise in the minimum wage – which recently rose from NIS 3,890 to NIS 4,100 a month, and is set to rise again in October – will “in the end come back to the consumer” through higher prices.

Makor Rishon Business Editor, Eran Bar-Tal, disagreed with Nitzan-Aviram in regard to price-fixing, and called the behavior of big food manufacturers “general cartel-like behavior.”

“We checked this, and I know that the cost of manufacturing cottage cheese is around 15% of its shelf price,” said Bar-Tal. “The difference between the highest and the lowest prices is something like 10%. What this says alone is that this is the behavior of cartels when it comes to cottage cheese products, just as it is with food products in general.”

“I truly think that we haven’t addressed the problems of the retail market here in Israel as we should. No government has had the desire to deal with these huge companies,” he continued, adding that policy-makers looking to help the lower strata of society should first address this issue, because welfare just “gives these people money with which they purchase from cartels.”

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