Judge Slaps Hefty Fine on Clubmarket

The collapsed supermarket chain Clubmarket has been slapped with a NIS 100,000 fine for violating consumer protection laws.

Haifa Magistrate's Court Judge Rachel Hose this week found the company guilty on several counts of misleading consumers by exchanging shopping vouchers for less than their printed value, recording prices at the cash register higher than that stamped on products, and other consumer law infringements. The charges were filed in 2004, prior to the collapse of the company this year.

The NIS 100,000 fine was a surprise even to the state prosecutor, who had claimed that a symbolic fine would suffice, since Clubmarket currently is under court protection from its creditors, having accumulated debts of over NIS 1.3 billion. An amount greater than a symbolic punishment eventually would harm the suppliers to the chain who have yet to receive money that the chain owes them.

State prosecutors concurred, saying that any fine would have to be paid from the fund for paying off Clubmarket's creditors - who are not expected to receive more than half of what is owed to them. Therefore, any hefty fine would harm the creditors. In addition, the state claimed that a symbolic fine against the chain would not necessarily lose its deterrent effect on others.

The judge was not convinced. Not only was Clubmarket's actions grave, but also it was not the chain's first consumer law infraction, and earlier punishments and fines had not led to a change in behavior. Hose was aware of Clubmarket's legal situation and the impact the fine would have on the creditors' fund, but, as a punishment, the fine was not exceptional. The fine would be charged as a debt on the company, and therefore, would be paid in the same proportion as other Clubmarket creditors (i.e. half).

In addition, the judge fined Clubmarket CEO at the time of the infringements, Yaakov Ginsburg, NIS 5,000, and ordered him to sign a NIS 10,000 guarantee that the company would not commit a similar offense for two years.