Economy minister issues ultimatum to food companies that hiked prices in wartime

Barkat gives them 72 hours to reverse increases or be put on ‘blacklist,’ hints he suspects illegal price coordination; manufacturers say government causing rise in cost of living

Economy Minister Nir Barkat attends an Economic Committee meeting at the Knesset, Jerusalem, on January 3, 2024. (Yonatan Sindel/Flash90)
Economy Minister Nir Barkat attends an Economic Committee meeting at the Knesset, Jerusalem, on January 3, 2024. (Yonatan Sindel/Flash90)

Economy Minister Nir Barkat issued an ultimatum Monday to Israeli food companies that have raised their prices since the October 7 Hamas terror onslaught and subsequent war, warning them that they will be publicly named and shamed on a “blacklist” if they do not reverse course.

Calling his approach “regulatory public shaming,” Barkat also hinted that major companies appeared to have coordinated their pricing, violating monopoly laws.

Industry figures panned Barkat saying the government is driving up prices with fees on imports and other aspects of food production which it could reduce for the benefit of the end consumer. Others remarked on the number of ministries the government operates, some of which critics charge are unneeded.

Companies that have substantially increased their prices since the start of the war include Tnuva, Osem and Strauss, which raised the price of some items by as much as 25 percent back in January.

In a letter addressed to a list of leading food manufacturing companies, Barkat wrote: “To the astonishment of us all, during a time of war, we are witnessing food price increases by large corporations, suppliers and retailers, in almost perfect coordination.”

He lamented that he does not have the powers of the Commissioner for Competition, “which in my opinion can stop the increase in prices that seemingly happened ‘simultaneously’ as by a concealed hand.”

File: A woman shops for dairy products at the Shufersal Deal supermarket in Katzrin in northern Israel, on November 28, 2022. (Michael Giladi/Flash90)

Barkat said it is unfortunate that his calls for a price freeze until the end of the war were ignored, and accused the companies of “spitting in the face of the consumers who are loyal to you and enrich your coffers and your pockets.”

He warned the companies that they have 72 hours to reverse the price hikes, and any companies that fail to do so will be put on a public blacklist.

The exact contents of the blacklist and the impact it could have was unclear, but Barkat said “it will be presented to the public…so that the Israeli consumer can judge for himself.”

Barkat also said he is examining various measures that can prevent companies from taking similar action again in the future.

The minister noted he rejects the explanations that companies have given for raising prices saying that the ongoing war overrides other considerations, in particular “when in most cases they come to increase the profit margin at the expense of the public.”

Hours after Barkat sent out his letter, the Shamir Salads company said it would cancel its price hike.

Manufacturers Association of Israel president Ron Tomer said in a statement he is “ashamed” of the government that, he said, for the past seven years has raised the cost of living with hikes on water, electricity, fuel and property tax.

He added that the government would have enough cash if it didn’t support “ten unnecessary ministries.”

Ron Tomer, President of the Israel Manufacturers’ Association. (Sivan Farig/Courtesy)

Regarding manufacturing costs, Tomer said, “I have no doubt that if the government had refrained from raising the rates of all the accounts under its responsibility, it might have had a positive effect on the final price for the consumer.”

He called on the government to lower the prices of property tax, electricity, fuel, water, and “the chain of price increases for which it is responsible” in order to “contribute significantly to curbing the cost of living in Israel which hurts every citizen.”

Uriel Lynn, President of the Federation of Israeli Chambers of Commerce, told the Ynet outlet that Barkat’s approach is “regrettable” and there are laws clearly defining what tools the economy minister has at his disposal to control prices.

“Before making threats, it would be right to analyze and examine precisely what are the reasons for the price increases,” he said. “The impression is that this has not been done yet in the Ministry of Economy.”

He also urged that “it is always worthwhile for the government itself to examine how it contributes directly to the price increases in the economy.”

War erupted on October 7 when Palestinian terror group Hamas led a devastating attack on Israel that killed 1,200 people, mostly civilians. Israel responded with a military campaign to destroy Hamas, remove it from power in Gaza, and release 253 hostages who were abducted during the attack.

A survey published by the Israel Democracy Institute survey last year, before the start of the war, found the Israeli public is mostly concerned about the high cost of living. It showed that two-thirds of respondents think food prices are the most significant factor, and around half blame housing costs, and 29% indirect taxation.

The majority of the public believes that the high cost of living is the fault of the government’s lack of action. Only 27% blame the large monopolies, and 3-4% attribute responsibility to local manufacturers, importers, or supermarket chains, the survey found.

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