Israel Blocks Egged from Major Public Transport Tender Over Competition Rules

The Israeli Public Transport Authority has disqualified the transportation giant Egged from participating in a significant tender (number 16/26) for operating bus routes in the Hasmonean cluster, a region encompassing Modi'in, Lod, Ramla, and Sha'arei Tikva. This decisive action aims to prevent Egged from exceeding legal limits on its market share and annual mileage, aligning with a government initiative to gradually dismantle the company's historical dominance and introduce new competitors into the sector.

The tender is substantial, covering approximately 26 million kilometers annually with a budget of 500 to 650 million shekels per year, totaling an estimated 5.5 to 7.5 billion shekels over the concession period. Egged is legally restricted to a maximum of 35 million kilometers in new contract awards. Having recently won the tender for the Jerusalem envelope area, Egged had only 20 million kilometers of eligibility remaining, insufficient for this new tender.

In a letter to Egged's CEO, Authority Director Idan Moalem stated that the company's existing operations represent a "significant proportion that highlights Egged's dominance." Egged had requested an increase in its mileage cap to 46.4 million kilometers, citing market growth, and proposed a mechanism to sell off routes, but Moalem rejected these proposals, emphasizing that the 35 million kilometer limit is absolute and not tied to market expansion.

This is not the first time competition regulations have hindered Egged's growth; the company was previously disqualified from tenders in Mateh Binyamin and Ma'ale Adumim. The Authority also denied Egged's request for an oral hearing, concluding that there were no special circumstances to warrant one and that the company had been given a fair opportunity to present its case. The tender will be published shortly without Egged's participation.