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Eri Steimatzky, CEO and controlling shareholder of the Steimatzky bookstore chain, was questioned yesterday by the Antitrust Authority on suspicion that he violated the terms of the merger agreement with the Sifri bookstore chain.

Steimatzky was told he was called in because the authority takes very seriously any suspicion of such a violation. Another senior company official was also reportedly questioned.

Steimatzky, who is also a partner in the Keter publishing company, allegedly ordered store managers to remove books published by competitors from the shelves of their stores. If the allegation proves true, it constitutes a violation of the terms of the merger agreement signed when Steimatzky bought a competing chain, Sifri, a few years ago. According to that deal, Steimatzky is prohibited from exploiting the chain's strength vis-a-vis its competitors.

Earlier this month Steimatzky sent a letter to all branch managers directing them to remove from the shelves books published by Kinneret, Zmora-Bitan and Modan, which are partners in rival chain Tzomet Sfarim, and other publishers.

"Publishers at Tzomet Sfarim continually run special offers in which they sell their books at laughable prices either at Tzomet Sfarim or other market outlets, in order to present us as expensive. I ask you to return immediately, en masse, books by Modan, Zmora-Bitan, Kinneret, Dvir, Masda, Michbarot L'Sfarut, Alfa. You may leave a small number of bestsellers in the stores," the letter states.

In a further clarification to its actions, Steimatzky released the following statement: "Modan publishers have recently begun selling books in supermarkets directly to the customers at prices lower than they sell to Steimatzky, and therefore we are forced to sell their books only on demand and not to stock them."

About two weeks ago, the Markstone investment fund signed an agreement to purchase all of Steimatzky's operations for approximately $50 million. The fund's managers said they have no plan to make changes to the chain's senior personnel.

Steimatzky is Israel's biggest and oldest bookstore chain, established in 1925. The company has 150 stores and annual sales of about NIS 400 million. Experts in the field recently estimated the chain's net profit at NIS 10 million, but sources close to Steimatzky say the actual profits in the privately-held company are even higher.