Effie Rosenhaus, who served as CEO of Israel’s biggest supermarket chain Super-Sol for eight years, is likely to serve time in prison, after the Jerusalem District Court convicted him on Monday on four antitrust charges and violating the terms of a 2005 merger.
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Attorneys specializing in such cases said on Tuesday, a day after the court issued its verdict, that the antitrust authority was likely to seek jail time for Rosenhaus. The law allows for terms of up to five years, but the lawyers said the authority would probably seek less than the maximum. Eli Gidur, a former vice president for marketing, was convicted of the same four charges as Rosenhaus. The defendants’ lawyers requested a postponement to prepare ahead of the sentencing phase of the trial, which is set for February 25.
Rosenhaus, who headed the company from 2003 to 2011, presided over a period when the chain increased its market share and introduced new formats such as the discount chain Super-Sol Deal. But in then final years, Super-Sol struggled as shopping habits changed and new competition from upstart retailers like Rami Levy made the market more competitive and tougher.
Israel’s antitrust authority filed the indictment against Rosenhaus and Gidur in 2010 alleging that they were responsible for Supersol’s violating the conditions of its 2005 merger with the supermarket chain Clubmarket and that they engaged in anti-competitive trade practices with suppliers. Among the suppliers mentioned in the case were Israel’s biggest names, including the Central Bottling Company (Coca Cola Israel), Strauss Group and the tea maker Wissotzky Group.
In court, Judge Moshe Yoed Cohen ruled that Rosenhaus had clearly contacted the suppliers to get them to end a sale that was being conducted by Mega, a competing supermarket chain, or to prevent such sales from happening in the future. Cohen rejected Rosenhaus’ claims that the calls were not made with intent.
“Despite his fiery style of speech in different parts of his testimony, I did not get the impression of an uncalculating individual who acts impulsively,” said the judge in court.
Rosenhaus had claimed that his conduct in phone calls with suppliers was not a premeditated move to restrict competition but simply reflected his “red-headed” temperament and a desire to preserve the value of suppliers’ brand names. The judge also rejected defense attorneys’ claims that suppliers’ decision not to call off the sale in any way exonerated the defendants, only that it showed that the suppliers had acted based on their own legal and business considerations.