Antitrust Authority director general David Gilo is threatening to fine Ashdod Port Company Ltd. NIS 12 million and to fine former Ashdod Port CEO Shuki Sagis and current VP customers Eli Bar-Yosef NIS 200,000 each. On Tuesday, Gilo announced that he will summon Ashdod Port for a hearing ahead of declaring it monopoly in the unloading of motor vehicles from the US and Europe. He is also considering declaring that abused the port's position in this market.
This is the first time that Gilo is using his new legal administrative authority to levy financial penalties. In the upcoming hearing, he is considering declaring that Ashdod Port sought to reach a restraint of trade agreement with G. Daniel Logistics and Port Services Ltd. not to provide services to car importers at Haifa Port Company Ltd..
The Antitrust Authority claims to have information, which shows that Ashdod Port handled 99% of vehicle imports from the US and Europe in 2009-11 and 95% in 2012, making it an apparently monopoly in this market. Most vehicles imported from the Far East are unloaded at the Eilat Port, but vehicles imported from the West are unloaded at Israel's Mediterranean ports.
The Antitrust Authority found that, from the importers' perspective, Haifa Port is a close alternative to Ashdod Port for the unloading of vehicles from Europe and the US. The information states that Ashdod Port set car unloading targets and discounts on port fees on the basis of the number of vehicles unloaded in separate agreements with different vehicle importers. Agreements were signed with Porsche, Suzuki, Dodge, and MAN trucks importer Automotive Equipment (2004) Ltd., Opel importer SHIR Shlomo Car Import Ltd., Mediterranean Car Agency Ltd., Volkswagen importer Champion Motors Ltd. and Champion Car Ltd., and Citroen and Peugeot importer David Lubinski Ltd., and other importers.
The Antitrust Authority found that to meet the unloading targets to be eligible for the discounts, the importers had to unload all, or nearly all, their vehicles through Ashdod Port. Use of Haifa Port for even a few imports would render the importers ineligible for the port fees discounts at Ashdod Port. The Antitrust Authority found that, under these circumstances, Ashdod Port's fees discount policy, which can be classified as a "target discount", deterred vehicle importers from using Haifa Port, harming competition between Israel's two Mediterranean ports.
Commenting on the proposed heavy financial penalties, the Antitrust Authority said, "This is an apparent violation with significant potential harm to competition by a port company, which apparently controls 90% of the relevant market. This fact justifies levying a financial penalty that approaches the maximum amount set by law. Another factor that should be taken into account is the timing of the contracts with the vehicle importers, which were signed around the same time as competition in vehicle imports was begun by Haifa Port.
"The Antitrust Authority found that the port's income from the unloading and storage of vehicles was more than NIS 100 million in 2012, and about the same in 2013."
Ashdod Port said in response, "When Ashdod Port receives the Antitrust Authority director's summons, it will study the matter and respond accordingly."
Published by Globes [online], Israel business news - www.globes-online.com - on February 19, 2014
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