Tnuva Agrees to NIS 3m Fine for Hiding Documents

The amount of the fine to which Tnuva consents represents an enhanced level of enforcement of the antitrust laws, Antitrust Commissioner says.

Tnuva agreed on Wednesday to pay a NIS 3 million fine in settlement of an investigation opened on suspicion that the dairy firm had withheld documentation from the antitrust commission.

The case arose last year, when the antitrust commission demanded that Tnuva provide data and documents related to the company's operations as part of an investigation of the dairy industry. In September 2011, after Antitrust Commissioner David Gilo's staff suspected that Tnuva had not provided all the required documents, antitrust investigators raided Tnuva's offices and seized additional documents.

If the company had been found to have violated the law, criminal charges could have been brought against Tnuva and its senior executives. The case arose before regulations took effect that would empower the commission to impose fines on offending firms.

The commission noted on Wednesday that if the case had arisen now rather than earlier, fines could be imposed and therefore it chose to come to an agreement with Tnuva on a fine rather than pursuing possible criminal sanctions. For his part, Gilo said the amount of the fine to which Tnuva had consented, NIS 3 million, represented an enhanced level of enforcement of the antitrust laws.

"The settlement that we have reached," he said, "sends a clear message that all of the players in the economy must respond to the commission's demands to turn over data and that failure to do so in full, even if not intentional or malicious, carries a substantial price."

Sources close to Tnuva said the failure to turn over all the documents was an innocent mistake. The documents apparently related in part to a draft report from the McKinsey consulting firm that noted that one of the alternatives to increasing Tnuva's profitability would be a steep increase in the price of dairy products for which demand was inelastic, such as cottage cheese and yellow cheese. Tnuva is deemed to have a monopoly on these products although other dairy producers also sell them.

The antitrust investigation uncovered documents that allegedly showed that Tnuva had exploited its influence in the market to raise prices. The commission announced Wednesday that it was closing its investigation against Zehavit Cohen, Tnuva chairman at the time in question, for lack of evidence.

For its part, Dear Israel, the cost-of-living protest group, said the NIS 3 million settlement agreement was "lip service" that would not deter any CEOs. "When a large corporation like Tnuva violates antitrust laws, it affects the lives of all the residents of Israel on a daily basis," it added.

The settlement is subject to public comment as well as approval by the Antitrust Tribunal.

Ilya Melnikov
Mati Milstein
Ofer Vaknin