Manufacturers Assn. to negotiate collectively for gas

Tamar

Antitrust Authority head David Gilo agrees that collective talks will help smaller companies get better prices for Tamar gas.

Israel Antitrust Authority director general Prof. David Gilo today granted an exemption from the ban on an agreement in restraint of trade to the Israel Manufacturers Association, clearing the way for the latter to conduct negotiations collectively on behalf of all industrial enterprises for joint purchases of natural gas from the Tamar reservoir.

Up until now, each enterprise wanting to switch to natural gas consumption had to negotiate separately with the Tamar partnership to buy gas. Smaller enterprises had to negotiate with companies marketing gas purchased from Tamar and reselling it with a mark-up to enterprises. The gas price in deals signed therefore reflected an absence of bargaining power on the part of enterprises vis-a-vis the only gas supplier in the economy - Tamar.

Today's exemption granted by Gilo is designed to enable industrialists to combine forces and thereby to obtain a better agreement. "In view of this state of affairs, it is clear that this arrangement gives the Manufacturers Association a means of bettering their terms, which they would be unable to do by negotiating individually with the gas supplier, and is therefore clearly beneficial," Gilo wrote in his decision. "In addition, direct marketing of natural gas to industrialists will reduce the need for agencies that coordinate the marketing of natural gas to industrialists, thereby avoiding a double margin." He added, "It can be hoped that the savings on costs and bettering of the trade terms obtained by the industrialists will be at least partially rolled over onto the consumers, thereby also benefiting the general public."

In view of the concern that this exemption from the ban on an agreement in restraint of trade is liable to give enterprises with membership in the Manufacturers Association an advantage over those without membership, the Antitrust Authority director general set conditions for his grant of the exemption, including a ban on Manufacturers Association officeholders who are also owners or shareholders in an industrial enterprises to take part in the joint negotiations with the gas supplier. The Manufacturers Association will allow industrialists who are not Association members to join it and its arrangements at any given time.

Published by Globes [online], Israel business news - www.globes-online.com - on February 25, 2015

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

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