Israel Consumer Council has filed an application for approval of a class action against Tnuva, regarding the cost of packaged yellow cheese. According to the lawsuit, the price is set through taking abusive advantage of Tnuva's position as a monopoly in the field of dairy products.
The lawsuit is based on an economic expertise opinion by Professor Yossi Spiegel, from the School of Business Administration at Tel Aviv University. The opinion, which was commissioned by the Council, indicates that Tnuva's surplus income is around 235 million NIS. The Consumer Council claims this sum for the consumers. This amount does not take into account interest or indexation. The damage to the public is the difference between the price actually charged and the price that should be charged as set under supervision.
In the past, prices of cheese sold by weight and in packages were under control and were set according to the cost of production plus profit. At that time, the cost of packaged cheese was about 24% higher than cheese sold by weight. In 2007, control for packaged cheese was removed. Within a short period of time, Tnuva increased the price of packaged cheese so that the price reached 124% more (!) than the cheese sold by weight under government control.
Consumer Council claims that Tnuva could get this price only through taking abusive advantage of its monopoly position in the dairy market. Professor Spiegel's expertise opinion supports these claims.
Cheeses included in the claim are HaEmek cheese (200 g and 400 g), Gilboa, Gush Halav and Tal HaEmek. Between 2007 and 2013, consumers have paid a total of $1.3 billion NIS for yellow packaged cheeses (included in the claim). The financial volume of sales of dairy products in Israel is estimated at 8 billion NIS in terms of price to the consumer, while the total of sales of products under active price control is estimated at 1.5 billion NIS.
Israel Consumer Council CEO, Adv Mr. Ehud Peleg, "This lawsuit is extraordinary in terms of its importance. The cost of living is on the public agenda. The problem of the cost of living stems from many reasons, including the fact that monopolistic entities set excessive prices. The Council acts in all ways at its disposal in order to eradicate these unacceptable phenomena, and will continue to do so, among others, by filing class actions. The Councils' actions are aimed to protect the consumers, to lead to compensation for damages caused, and to institute norms of fairness in the future. Monopolistic organisms set excessive prices and milk the consumers rather than making them partners in profits - and partners should be treated fairly".