Trustbuster Raids Offices of Two Largest Supermarkets

Antitrust Authority inspectors raided on Wednesday morning the offices of Super-Sol and Mega Blue Square, collecting documents as part of the investigation into the relationship between the country’s largest supermarket chains and their major suppliers.

Sources close to Mega said that some of the documents were from 2009 and 2010. Sources close to the two chains said no executives were detained for questioning.

The trustbuster refused to confirm or deny this, only stating that it was continuing to investigate suspicions that dairy monopoly Tnuva had violated regulations relating to suppliers.

Several antitrust experts stated that Wednesday’s move is probably an indication that the Antitrust Authority believes that the supermarket chains had been withholding documents it had requested, or alternately that the chains are suspected of being complicit with the suppliers and potentially participating part in a cartel.

Generally, the Antitrust Authority will not raid an institution that is not under suspicion, stated the experts.

One expert said he couldn’t recall a single case where the trustbuster raided a company’s offices merely in order to collect documents, in cases where that company was not under suspicion.

The Antitrust Authority’s investigation into Tnuva began in 2011, and became public in 2012, when inspectors raided the dairy company’s offices. A food sector executive stated recently that the Antitrust Authority had been seeking information from grocery chains regarding their negotiations with Tnuva and its subsidiaries.

In 2012, the Antitrust Authority said the investigation could be expanded into other major producers. At the beginning of this year, it stated it was also investigating the Central Bottling Company (Coca-Cola Israel), which allegedly violated antitrust law by conditioning discounts on soft drinks on customers stocking products from dairy subsidiary Tara.

The trustbuster’s moves come as an interministerial committee is examining the country’s food prices, while another committee is examining Israel’s high cost of living in general. The Finance Ministry recently told Israel’s three dairies – Tnuva, Strauss and Tara – that several more products were being placed under government price control.

Food prices were one of the factors in the nationwide cost-of-living protests that broke out in the summer of 2011.

Israel’s five largest food producers control some 50% of the market.

Tnuva, together with its subsidiaries, is Israel’s largest food distributor, with 17.4% of the market. Distributors are forbidden from striking deals with grocery chains that would limit the number of suppliers to the chain. They are also forbidden from buying shelf or display space, and cannot have any involvement in how the items are arranged on shelves or priced.

Both Mega and Super-Sol stated in response that they were cooperating with the authorities. Tnuva refused to respond.