November 24th, 2016, 8:55amYa'acov Zalel
An Israeli district court rejected November 23 a petition by the Tamar Partnership to dismiss a class action law suit alleging monopolistic pricing of natural gas in Israel. The district court rejected the request in a preliminary hearing. Now the court will have to hold a hearing whether to approve the class action before it goes to a full trial. The process can be quite lengthy as the class action was filed almost two and half years ago and the trial hasn’t started yet.
The plaintiffs estimated that the excess cost for the Israeli customers is NIS 2.5bn ($630 mn)/yr and asked the court to order Tamar partners to compensate the customers and reduce prices. The estimated excess cost for the duration of the contract was estimated at NIS 26.8-43.7 bn.
Tamar Partnership is represented by some of the biggest and costliest lawyers in Israel. A few months ago the defence team was bolstered when the government's attorney general, who heads the public prosecution, joined the team in supporting the petition to dismiss the class action.
According to the class action, the partnership used its monopolistic stance in order to dictate gas prices to Israel Electric Corp. (ICE) and setting a price that is "double its fair value". The plaintiffs argue that it was a violation of the antitrust law.
In their defence, the energy companies argued that the claim is contradicting the ruling in the Regulatory Natural Gas Framework passed earlier this year and approved by the High Court of Justice. However, the district judge, Esther Stummer, said in her ruling that the exemption given to the gas monopoly in the framework did not exempt them from the article in the antitrust law that forbids taking advantage of monopoly positions.
Noble Energy, which owns 36% of the Tamar Partnership has yet to complete a sell down of 3% of its holdings in Tamar to a group headed by Harel Insurance and Finance, one of the largest insurers in Israel in a deal worth $369mn. It is not clear how the new ruling will influence the deal.