Minister of the Economy and Industry Eli Cohen today signed an order requiring the major supermarket chains to publish differences between their prices and prevailing overseas prices for seven toiletry items of the largest importers: Schestowitz, Unilever, and Diplomat. The order will be sent to the Ministry of Justice, which is expected to inform the supermarket chains that they have up to 20 days to place signs, after which enforcement measures will be taken against them.
The first list includes seven items for which the Ministry of the Economy and Industry found the biggest differences between prices in Israel and international prices - 50-107%. The sign bearing the differences must appear next to each of these products. Most of these products are imported by Schestowitz, one by Unilever, and one by Diplomat. They include three different types of Colgate toothpaste, three Speed Stick and Gilette men's deodorants, and Dove women's deodorant.
The Ministry of the Economy and Industry is assuming that when the information about the price differences is put on the signs, the resulting pressure will make the retailers fee uncomfortable, and they will lower the price on their own initiative, even if it makes the product a loss leader for them.
Commenting on the order, Victory Supermarket Chain Ltd./ (TASE: VCTR) CEO Eyal Ravid said, "I believe that the three importers will ask the international supplier to lower the price for them, so that they can lower it in Israel, and the price difference will be smaller." Asked how consumers will react when they see the signs in the supermarkets, Ravid answered, "What alternative do the consumers have, other than getting angry?"
According to Ravid, the price differences in the pharmacy chains are higher than in the supermarkets selling toiletries, and displaying these numbers "will help the supermarkets vis-a-vis Super-Pharm. The Israeli public is used to buying pharmaceutical products at Super-Pharm, and now they will go to the shelves and see these dramatic differences."
Federation of Israeli Chambers of Commerce president Uriel Lynn called the order "another classic example of unnecessary regulation. Publishing these figures will not contribute to the struggle against the cost of living; it will only confuse the consumer. Information about the average overseas prices of some product will be of no use to the local consumer, and if the Ministry of the Economy and Industry wants overseas prices to be published, it should do so itself, without increasing the burden on the retail sector."
Another factor that will probably make it difficult to lower prices is the cosmetics reform - the "Colgate Reform" now being discussed by the Knesset Labor, Welfare, and Health Committee, which is likely to ban parallel imports of toothpaste. This will automatically increase the retailers' dependence on the exclusive importer.
Published by Globes [online], Israel Business News - www.globes-online.com - on February 8, 2018
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