Super-Sol, CEO Face Antitrust Charges Over Bullying Suppliers

Efi Rosenhaus, chief executive officer of Super-Sol, may face charges over allegedly breaching antitrust laws relating to the chain's conduct with its suppliers.

The Antitrust Authority plans to take legal action against the chain itself, as well as Rosenhaus and Eli Gidor, Super-Sol's vice president of marketing. The trust-busting authority cites breaches of the terms set for the merger between Super-Sol and Clubmarket. Namely, Super-Sol tried to hamper arch-rival Blue Square by bullying its suppliers, the authority suspects.

For example, in December 2008 Super-Sol and Blue Square held similar sales. The company and its officers are suspected, among other things, of pressing its suppliers to demand that Blue Square call off its sale. When they refused to do so, Rosenhaus and Gidor allegedly removed the suppliers' products from Super-Sol shelves.

The items that the public couldn't get at Super-Sol included popular products such as Osem's Red Mug instant coffee, Wissotzky ice tea, Shahar chocolate spread and Neviot mineral water.

A Super-Sol boycott (however unofficial) spells bad news for suppliers locked out of Israel's biggest retail chain.

The Antitrust Authority chiefs told Rosenhaus and Gidor yesterday that its legal advisor has recommended filing charges against them. The recommendation is the culmination of an extensive investigation that began six months ago.

The trustbuster quizzed witnesses, questioned senior officers of major companies and raided Super-Sol offices, taking documents.

The offenses Rosenhaus and Gidor may be accused of carry sentences of up to three years' imprisonment. However, both have the right to a preliminary hearing, at which they can state their positions.

Super-Sol has been given 30 days to respond to the charges.

In 2005 the Antitrust Authority agreed to let Super-Sol buy Clubmarket, though it stipulated limitations to preserve competition among Israel's retail chains.

At the time, in 2005, Super-Sol was already Israel's biggest retailer, and Blue Square was second. Clubmarket was third. The commissioner at the time, Dror Strum, knew that allowing Super-Sol to buy Clubmarket would reduce the number of retail players from three to two, leaving the private-label chains out of it. However, he reasoned that unless he approved the merger, Super-Sol would collapse.

However, he stipulated that Super-Sol couldn't use its strengthened clout to bully suppliers. It seems Super-Sol did not adhere to the letter of that stipulation.

"Super-Sol apparently did what they were afraid it would do, and pressed suppliers into causing damage to a rival," said a source at the Antitrust Authority. "Pressure on the suppliers is the main story, from the perspective of the Antitrust Authority."

The chain is controlled by Nochi Dankner's IDB group. Yesterday the group published an announcement in support of Super-Sol and Rosenhaus. IDB lauded the Super-Sol management, led by Rosenhaus, for their professionalism and sense of responsibility.

Rosenhaus is among the IDB group's top managers, it stated. "We in the group are confident that the Antitrust Authority will quickly realize that the company, Rosenhaus and Gidor acted properly. IDB is proud to be the owner of Super-Sol," it stated.