Did England’s Favorite Chocolate Get a Fair Shot at Israeli Palates?

Strauss Group claims that Cadbury's failure to penetrate Israeli market was due to bad business decisions, not antitrust activity.

In the latest development in a long-standing struggle over Israel's lucrative chocolate market, the Strauss Group - the maker of Elite chocolates - submitted new evidence in its defense against Carmit Candy Industries, which claims it was unfairly pushed out of the market when it tried to introduce Cadbury to Israel more than a decade ago.

The Strauss Group has submitted an expert opinion in court that Carmit suffered at most NIS 7.6 million ($2.2 million) in damages from possible anti-trust activities in its failed attempt to bring Cadbury chocolate to Israel.

Carmit filed a lawsuit against Strauss in 2010 claiming that Elite, which later merged into the Strauss Group, pushed Cadbury out of the Israeli market by abusing its power as a monopoly. Carmit, Cadbury’s local partner, has claimed 80 million shekels in damages for what it alleged to be anti-trust behavior by Elite between 2002 and 2003, when Cadbury sought to enter the Israeli market.

Strauss has stated that the actions taken by Elite at the time, including the lowering of its prices, were reasonable. The Strauss Group has claimed in court that Carmit failed to penetrate the Israeli market due to bad business decisions by its senior executives and difficulties that arose between the company and Cadbury. Strauss submitted internal Carmit documents at the Central District Court in Lod to show that Cadbury’s failure to penetrate the Israeli market was due to internal problems.

“We trust and are confident that the court will give full redress for Strauss’ behavior in pushing Cadbury products out of the market and in trying to drag out the case over years by hiding documents and figures,” said Carmit’s lawyer Zohar Lande in response.

Among the evidence submitted was correspondence between the head manager of the Cadbury’s Israel project and Carmit CEO Rael Goodman, in which Cadbury requested that Carmit reduce the its exposure to media, especially foreign media following its product launch. The request came following an article in a London Jewish newspaper about Cadbury’s launch in Israel that Cadbury worried would lead to an Arab boycott of its products.

Another internal Carmit document submitted by Strauss summarized a meeting between Cadbury and Carmit in March 2003. Cadbury stated in the meeting that it would suspend its financing of Carmit’s marketing activities until the latter had created a new business plan that would ensure significant sales growth.

Elite was declared a monopoly in the area of chocolate candy bars in 1988. As a result, under the Anti-Trust Law Elite was not allowed to lower its prices in a “predatory” manner. At stake in the case is whether Elite’s price reductions were predatory and whether they were enough to push Cadbury’s more expensive chocolate out of the market.

Bloomberg
Adi Dovrat Meseritz
Reuters