Shufersal guilty of anticompetitive practices, Antitrust Authority say

The allegations follow a six-month investigation, during which the Antitrust Authority questioned managers of leading competitors.

food shopping 88 224 (photo credit: )
food shopping 88 224
(photo credit: )
Shufersal CEO Effi Rosenhaus and deputy marketing manager Eli Gidor wanted suppliers to shun a competing supermarket chain in an effort to restrict competition, according to the Antitrust Authority, which may recommend that they be indicted. The Antitrust Authority suspects that Shufersal, which belongs to Nochi Dankner's IDB Group, violated the terms of its 2005 merger with Clubmarket by pressurizing suppliers of Blue Square Israel through a restrictive arrangement. "The investigation shows, allegedly, that Shufersal and its senior managers did not fulfill the Shufersal-Clubmarket merger conditions and, in addition, were attempting a restrictive arrangement," the Antitrust Authority said in its report, which was released Monday. "These actions were carried out to reduce the competition between Shufersal and the Blue Square Israel supermarket chain." The Antitrust Authority will hold a hearing for Rosenhaus and Gidor before recommending they be indicted. Shufersal will have 30 days to respond to the allegations and present its case in writing. The allegations follow a six-month investigation, during which the Antitrust Authority questioned managers of leading competitors and seized documents from Shufersal's offices. Should the managers be indicted, they could face a maximum sentence of three years in prison. "For years Shufersal's managers, with Rosenhaus at the top, have been leading the company with high professionalism and responsibility to great achievements in Israel's retail sector," an IDB Group spokesman said. "At the IDB Group, we are convinced that through the hearing it will quickly be clarified that the company and its managers - Rosenhaus and Gidor - acted without any fault." As part of the approval of the merger with the financially stricken Clubmarket chain, which brought together two out of the three largest supermarket chains in Israel, the Antitrust Authority stipulated conditions that would prevent Shufersal from abusing its market power. One of the conditions imposed included the prohibition to exert pressure on suppliers in a way that would hurt competition. "This is exactly what allegedly happened," Antitrust Authority official Ilan Steiner told The Jerusalem Post Monday. The investigation found that last December, during Hanukka, Blue Square advertised sales promotions for products at lower prices than Shufersal. Similar or identical products were offered at Blue Square's Mega and Mega in the City branches and in Shufersal advertisements. In response to the Blue Square advertisements, Rosenhaus and Gidor allegedly asked suppliers who work with both companies to stop providing those products to Blue Square. When they refused, Rosenhaus and Gidor allegedly decided that Shufersal would boycott specific products from those suppliers and remove them from their shelves. The purchase of Neviot mineral water, Red Mug coffee and ICE T drinks allegedly were halted.