The Economics Committee, chaired by MK Michael Bitton, approved the postal reform for a second and third reading. The main purpose of the reform is to open, after years of attempts, the postal market to competition. Which will exceed the new service or price facilities.
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At the same time, the reform aims to get Israel Post out of its loss situation – in August, the company reported losses of NIS 64 million in the first half of 2021, following a loss of NIS 643 million in 2020. The Ministry of Communications is expected to allow the post office to have limited printing services and use its branches to sell additional services and products, such as car accessories or insurance.
The reform, promoted by Communications Minister Yoaz Handel, is based on the recommendations of a committee headed by Danny Rosen, former director general of the Ministry of Communications. The committee was established by former Communications Minister Ayoub Kara in 2018. , And despite this, Communications Minister Yoaz Handel chose to promote them as part of a table-cleaning move he received from his predecessors in office.
The main failure pointed out by those who oppose the reform is that the Ministry of Communications is in a hurry to open the market to competition immediately, without removing barriers that create an advantage for the Israel Post. The biggest barrier facing companies competing with the mail (including Messer, Barry Printing and other small competitors) is that they are not accessible to the distribution centers and mailboxes, the real estate through which about 30% of the quantitative mail is distributed.
The current reform leaves Israel Post with complete exclusivity over the distribution centers, with competitors having to hire its services to distribute mail to their customers. Competitors fear the change because it establishes the status of Israel Post as a monopoly, prevents them from being responsible for the service provided to their customers and eliminates competition in the service dimension, despite the fact that previous committees recommended requiring Israel Post to give physical access to competitors to distribution centers.
Liran Avishar Ben Horin, the ministry’s director general, admits that the proposed solution as part of the reform is not optimal, and the ministry is doing staff work to find the appropriate future solution but does not address the ministry’s failure to implement past recommendations on the issue. : “I look at Handel’s letters. There is a statement that the proper model is to grant access to distribution centers. When a competing body is established and analyzes what is blocking the competition, it should be addressed, “argued MK Nira Shefek (Yash Atid).
Despite the criticism Handel is determined to pass the reform soon. The reason is that the discussions on the law are taking place in the shadow of the move to privatize the mail in its entirety by selling 40% of it in an IPO and 60% to a private investor. The better the reform with the monopoly, the more attractive the company will be to potential buyers. Therefore the firm is not interested in giving equal access to the distribution centers – so that it can offer the expensive real estate to the buyer.
“These are the assets of a company that we want to lead to full privatization. If you take its assets from the company, you take away from me the flexibility in negotiations,” explained Avishar Ben Horin, the ministry’s director general. 4 years, after which the ministry will be required to determine a permanent solution.
Sources in the message claimed that there is another barrier that prevents free competition in the market – the distribution of zip code to new neighborhoods is done by Israel Post, and the other companies can distribute mail to a new neighborhood only after a zip code has been determined. About 97% of the new neighborhoods established in the last two years, so this is the only one that can operate in these neighborhoods.
During the debates, Knesset members raised concerns that the removal of price controls that the Israel Post will charge businesses will lead to price differences between the crowded central cities, where the distribution of the mail is more cost-effective, and the peripheral localities. “This section is very substantial, and it can also apply to other areas beyond the communications market. I do not have the confidence that you have that there will be no price discrimination against communities in the periphery or Arab communities that do not have good infrastructure. How can I ensure that prices are uniform prices?” , Claimed MK Osama Saadi at the last debate.
The companies that compete with the post office, which are currently taking advantage of price controls to offer a lower price than the Israel Post, have also strongly opposed the clause. The director general of the Ministry of Communications, in response, thought that these claims were populist and sinful to reality. “The media companies and the banks are not allowed to give different prices. So I do not see how the change in price between the periphery and the center is going to roll over to the consumer. This thing will not happen. Moreover, we have a discount that once the market opens up to competition. “Prices have dropped and perhaps this surplus will be passed on to the consumer as discounts,” she said. Lowering price controls for remote areas is especially important because the Israel Post claims that it loses about NIS 150 million a year as a result of the obligation to provide a universal service.
After the discussion, Avishar Ben Horin said, “The solution set for the distribution centers is a good solution that is much better than the current situation where competitors can not distribute to many addresses in Israel. He believes that a competitive structural solution does allow access to the customer’s home. Does he allow it? Does it break equality? We are not sure. “The future and what will be the ideal model. We have a team that is doing staff work on the subject, and any attempt to determine the model at the moment does not leave the government the proper flexibility that is so important in this delicate period.”