Major Food Firms Face Watchdog on Shelves

Major food companies will no longer be able to dictate shelf-stacking policies of supermarket chains, nor interfere in what other competitive products are on offer in the same store, according to new rules drafted by the new antitrust commissioner.

Antitrust Commissioner Ronit Kan said yesterday that she will submit her draft agreement to the Antitrust Court. The agreement, which sets guidelines for various aspects of the relationship between suppliers and the country's main supermarket chains, was signed by Kan's predecessor, Dror Strum.

The authority had carried out a two-year study of business practices in the industry between 2000-2002, after antitrust suspicions were raised about agreements between suppliers and the chains.

The authority examined the claim, for example, that when a leading supplier offered customer discounts at one supermarket chain, competing chains were prohibited from holding a similar campaign.

The study showed that restrictions placed on monopolies in the food industry - including Strauss-Elite, Tnuva and the Central Bottling Company (Coca Cola Israel) - were not honored, and that the monopolies signed exclusivity agreements with various sales points.

The new accord prohibits agreements between suppliers and retail chains that block competitor product access to supermarket shelves. It forbids suppliers from interfering in decisions regarding the number or identity of competing suppliers whose products are sold at the same outlets.

Regarding the eternal battle over supermarket shelf space, the agreement stipulates that suppliers will be prohibited from stocking shelves starting 30 months after the document's final approval.

The agreement does not contain any sweeping guidelines about the use of loss leaders - "doorbuster" prices, often below cost, meant to lure in customers and break the competition. Instead, the Antitrust Authority will deal with each case individually.

The authority published a report containing its research findings, as well as a paper on the legal aspects of supplier-retailer agreements, before entering into negotiations that led to the new agreement.