Antitrust regulator wants to restructure gas sector

David Gilo

David Gilo sounded determined to break up the natural gas monoply at the Israel Antitrust Authority annual conference.

Israel Antitrust Authority head Prof. David Gilo is showing no signs of reversing his decision to liquidate the natural gas monopoly of Delek Group Ltd. (TASE: DLEKG) and Noble Energy. While negotiating with representatives of the two companies, Gilo said today at the Antitrust Authority annual conference that he was acting to restructure the natural gas market.

"In the natural gas sector, subject to the hearing, we're aiming to change the market structure in order to generate genuine competition between the reservoirs in the natural gas market," Gilo stated. "The anchor for this is our allegation of an agreement in restraint of trade that caused the monopoly, about which there will be a hearing with the parties. We aren't intervening against the monopoly just because it's a monopoly. We’re intervening against the monopoly because of the allegation that the monopoly was obtained through an alleged agreement in restraint of trade made by the parties."

Gilo argued that he was making great efforts to avoid going to court on the issue. "Under the Antitrust Law, it's possible to reach a draft consent decree in order to try to solve the competition problem arising from an alleged violation of the law. The Antitrust Authority has done its best to reach an out-of-court settlement in order to find a way that will both generate competition in the market and avoid the gas partnership's threat not to develop the Leviathan reservoir in the event of legal proceedings.

"The legislator instructs us as follows: first check with those who allegedly violated the law whether they agree to the plan you are considering adopting. If they agree to the plan, submit it for public comments. After obtaining comments from the public, study them and consider carefully according to all the current data available at the time whether to submit the plan for court approval.

"We should submit the plan for court approval only if we're convinced that the draft arrangement achieves the purposes set by the law: preventing harm to competition for the public's sake. It must be emphasized that this is an exceptional case of unprecedented importance to competition in the economy, and that we received an unusual number of public comments. At the moment of truth, after studying the public's comments and all the up-to-date data we had accumulated, we reached the conclusion that the responsibility given us by the law didn't allow us to sign the agreed draft agreement, and didn't allow us to convince the court to authorize this solution."

Gilo said that together with the negotiations he was conducting with Delek Group and Noble Energy, he was determined to liquidate the monopoly in the gas market. "We'll hold the hearing with the gas partnership on this question, and we're in constant touch with them. I think that the question that we all have to ask ourselves is how we want such an important market to look in the long term - whether we want a competitive market structure or a permanent monopoly."

Published by Globes [online], Israel business news - www.globes-online.com - on January 13, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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