Trustbuster Raids Tnuva Offices, Questions Chiefs

move follows Tnuva's refusal to hand over financial reports requested by the trustbuster as part of its broader investigation into the country's dairy sector.

The Antitrust Authority called in Tnuva's top executives for questioning yesterday after raiding the dairy's offices and confiscating documents earlier in the day.

The move followed Tnuva's refusal to hand over financial reports requested by the trustbuster, said a source connected with the investigation.

The authority had requested the data as part of its broader investigation into the country's dairy sector.

Refusing to give the trustbuster requested information is illegal.

The country's largest dairy had a rough three months, but this was its hardest day yet. The problems began in June, when a widespread cottage cheese boycott brought on by price increases damaged the company's sales. Problems continued when student unions launched a boycott of Tnuva two weeks ago, again over prices.

Yesterday evening, Apax chairwoman Zehavit Cohen and Tnuva CEO Arik Shor were questioned under caution at the trustbuster's offices. They were not detained. Apax owns a controlling share in Tnuva.

Tnuva said it was cooperating with all requests and questions.

"There are suspicions that Tnuva is hiding documents," said the trustbuster. "We sent a clear request for data, and they gave us partial information. This is a criminal offense. There are signs that they intentionally hid data."

Over the past few weeks, the authority requested information from players in the dairy supply chain - including farmers, manufacturers and supermarket chains - in order to determine the extent to which the industry is concentrated, and what steps should be taken to increase competition. Tnuva did not comply, so the authority confiscated computers and documents.

An antitrust expert said the issue probably extends beyond the refusal to hand over requested documents.

"If the Antitrust Authority is investigating a company, that means there are concrete issues. The authority doesn't investigate due to things like not delivering documents, but rather due to issues like hiding information or delivering false information," he said.

The authority had never before raided a company's offices simply because documents were not handed over, said one legal expert.

"If the trustbuster breaks into a company's office, they're probably looking for specific things, such as data that was consciously withheld. Companies don't refuse to give the trustbuster data; they simply hide certain documents," he said.

A source in the dairy sector said Cohen and Shor were being questioned over whether Tnuva had used its monopoly status to raise prices.

Sector sources sector had no warm words for the company yesterday.

"Zehavit can't be part of Tnuva's solution because she became part of the problem, and there are lots of rumors about whether she'll be continuing to work for Apax," said a senior sector source.

"It's great that they were called in for questioning," said a senior executive at a grocery store chain. "This will put pressure on them. Maybe now Apax will bid farewell to Zehavit. She caused the whole uproar - she pushed Tnuva and the entire market to raise prices. She boosted Tnuva at first, but she went too far and hurt average citizens, and now it's boomeranging."

Cohen appeared on television in an attempt to defend Tnuva amid the cottage cheese protest, but drew harsh criticism instead, becoming one of the symbols of the protest.

Tnuva officials tried to appear optimistic yesterday.

"They didn't try to hide documents. They were called in for questioning, that's all," said one Tnuva official.

Tnuva's day had started on a rough note, as Apax and Tnuva minority shareholder Meir Shamir met in court over their disagreement about publishing the dairy's financial reports. Outside the Tel Aviv courthouse, students protested with signs calling on Tnuva to stop milking the public.

During the first week of the Tnuva boycott, the company's market share decreased from 53.1% to 51.4%. The drop was less severe in the second week, due to both Tnuva's aggressive sales and shortages in products from competing dairies Tara and Strauss.