Trustbuster Files Charges Against Super-Sol Execs

The Israel Anti-Trust Authority filed an indictment yesterday against Super-Sol, company CEO Efraim Rosenhaus and Eli Gidor, the vice president of trade and marketing. They stand accused of violating the terms of a merger and attempting to breach a binding agreement.

Super-Sol is accused of attempting to undermine competing supermarket chains Mega and Mega Ba'ir, owned by Blue Square, in violation of the restrictive conditions of Super-Sol's 2005 acquisition of the failing Clubmarket supermarket chain.

According to these conditions, Super-Sol was forbidden from interfering with suppliers' arrangements with competitors, and from demanding that a supplier not sell a product to a competitor.

The restrictions were aimed at mitigating any damage to competition or consumers, and at helping competitors recover from the merger of Super-Sol and Clubmarket.

However, Super-Sol allegedly demanded that distributors - including Strauss, Osem, Wissotzky and Coca-Cola Israel - change the terms of their arrangements with its competitor, Blue Square.

In addition, it is alleged that Super-Sol changed the terms of its arrangements with the private brand Razit after it began manufacturing products for Blue Square.

"We view with seriousness the violation of the terms set for the company with the approval of the merger," Anti-Trust Authority head Ronit Kan said. "These conditions are designed to prevent damage to competition. Violating these conditions will lead to steps taken to enforce them" - which could possibly include jail time, she said.

Super-Sol responded by saying the accusations were baseless, and said the company and its managers had not committed any crimes.

"It is unfortunate that the Anti-Trust Authority has chosen this route," said Rosenhaus. "Gidor and I have decided not to agree to the plea bargain we were offered, even though it appears to offer a 'light' punishment - as it requires that we confess to the accusations. We've decided to go to court, where we will prove our innocence."

The indictment comes in the wake of an investigation conducted by the trustbuster a year ago. Senior executives were questioned, and the authority confiscated documents. It then held a hearing for the Super-Sol officials.

The indictment cites an incident that occured in December 2008, when both Blue Square and Super-Sol took out newspaper advertisements listing Hanukkah sales on particular products. The ads were published on the same day. However, the prices offered at Blue Square's stores - Mega and Mega Ba'ir - were lower than those offered by Super-Sol, even though they were conditioned on other purchases.

In response, Super-Sol's executives allegedly contacted the products' suppliers in order to pressure them to end the special offers at Blue Square. Super-Sol also allegedly threatened to stop buying products from certain suppliers.