Super-Sol, Blue Square Could Be Forced to Sell Some Stores

Committee charged with lowering food prices still does not know whether it could legally take such a step.

The committee charged with lowering food prices is discussing ways to split up Israel's two major retail chains, Super-Sol and Blue Square, by forcing them to sell off some of their stores. The fact that two companies control 60% of the country's retail space is very problematic, the committee reportedly decided.

The committee still does not know whether it could legally take such a step. It is considering setting definitions - in partnership with the Antitrust Authority - for regional market concentration, based on the number of branches in a certain area relative to the number of residents. Thus, if a certain chain is found to have a high concentration of stores in a specific area, it could be forced to sell some of them.

Supermarket - Ofer Vaknin - August 2011
Ofer Vaknin

The regulation would also block chains from opening new branches in concentrated markets.

Industry, Trade and Labor Minister Shalom Simhon considers this subject to be especially important. He has said that the grocery chains have turned into real estate companies, and that consumers are paying for the constant, uneconomic launch of new stores. Suppliers have said that they're the ones financing the new outlets, as the chains force them to give new stores discounts for half a year.

The committee decided to focus on two issues: reducing concentration and increasing competition.More food imports will be allowed, for one thing. Currently, a representative of a foreign company could be its only importer in Israel. Parallel imports would mean that other companies abroad or in Israel could import these good alongside the official importer.

Exclusive importers that control the entire supply of a given product in the local market often charge significantly more for that product here than it costs abroad.

The committee received precise figures on this subject from the Industry, Trade and Labor Ministry's planning and economics department head Benny Pfefferman.

The committee is also expected to discuss breaking up Tnuva, as TheMarker has reported. Tnuva responded in the past that this was a populist declaration that could not legally be implemented.

The committee is also discussing how to advance products by small and mid-sized manufacturers. These players have trouble meeting the chains' demands for special payments and are pushed out by larger suppliers. The committee is considering forcing the chains to devote at least 20% of their shelf space to products from small or mid-sized manufacturers.