Antitrust Commissioner David Gilo announced on Wednesday that he is considering expanding the extent to which two of Israel’s food giants, Tnuva and the Strauss Group, are deemed to be monopolies, subjecting them to more intensive government oversight.
Gilo’s announcement comes against the backdrop of new legislation affecting the food industry, which is due to come into force in the middle of January and which is expected to limit the freedom of action of major food suppliers.
Tnuva has been considered a monopoly with respect to its sale of milk and other dairy products since 1988. The Antitrust Commission issued a hearing notice in which it said it was considering declaring Tnuva a monopoly in 11 more distinct product areas including butter, cream, spreadable white cheese, solid yellow cheese, cottage cheese, milk, ultra-pasteurized milk, white yogurt, “leben” (a cultured milk product) and sour cream.
The Antitrust Commission has found that the dairy sector is purportedly comprised of a number of separate markets. Yellow solid cheese, for example, was found by the commission to be distinct from spreadable white cheese and they in turn are allegedly separate from the cottage cheese market because consumers don’t see them as being sufficiently similar to be a substitute for one another. As a result, the commission staff believes that the designation for Tnuva should be refined to declare it a monopoly in a number of more distinct product markets.
Strauss has been deemed a monopoly in the dairy sector as well as with respect to products in its Elite brand line since 1998. The staff of the Antitrust Commission is now suggesting that there are four other markets in which Strauss should be considered a monopoly: cream-textured cheeses; small dairy desserts that are marketed for children (“Gmadim” in Hebrew); flavored milk; and yogurt beverages.
The dairy market in Israel generates 7.4 billion shekels in annual sales, the Storenext retail research firm reported. Tnuva has a 57% share of the market; Strauss has another 22%; Tara has an 11% share; while smaller producers account for 6%. The market for the flavored milk beverage market accounts for 380 million shekels in sales, of which Strauss has a 63% share, Tnuva 35% and Tara just 2%.
Strauss Group shares decline by 2.8% on Wednesday on the news from the Antitrust Commission. Shares of Mivtach Shamir Holdings, which indirectly holds a stake in Tnuva, declined by 0.1%.
Want to enjoy 'Zen' reading - with no ads and just the article? Subscribe todaySubscribe now