The Tel Aviv District Court today ordered Tnuva Food Industries Ltd. to pay NIS 55 million to 220,000 consumers who purchased milk between October 1994 and September 1995, to which silicon had been added. This is an unprecedented class action ruling in Israel.
The compensation will be divided three ways: benefits to consumers through cheaper products (or larger packages without increasing prices); transferring part of the amount of compensation to research funds or scholarships in the food and nutrition sector with public health relevance; distributing free milk to needy populations through charities.
The judge will determine how the compensation will be divided between these three programs after hearing the views of the parties concerned and the Attorney General and after receiving an expert economic opinion and a plan for approving the division.
The class action suit was filed in 1995 by the late Tawfiq Rabi and the Israel Consumer Council after consumers were misled regarding the ingredients and contents of skimmed UHT milk. Attorney Iyad Rabi claimed that from late1993 through September 1995 Tnuva's dairy in Rehovot produced and marketed about 13 million liters of milk containing a substabce called DMPS, known commercially as silicon.
The suit claimed that the substance added to the milk was prohibited by law and that Tnuva did not tell consumers that the substance was in the milk and denied the fact when the affair was first exposed by the Hebrew daily "Ma'ariv." Following the revelations unsold cartons were removed from shelves and destroyed. Tnuva admitted to using silicon for a specific period in the milk production process in order to prevent frothing, but claimed that it was a substance approved for use in the food industry as an additive in various food products. As they claimed there was no risk in drinking the milk, there was no need to mark the existence of the silicon on the packaging.
In response to the ruling Tnuva stated, "At first glance it seems that the amount of compensation is exaggerated to an unprecedented degree. The events took place 13 years ago and Tnuva has since undergone a major and significant transformation in which its entire senior management has been changed, all production processes have been completely re-examined, and strict quality control procedures of international standards have been instituted."
Published by Globes [online], Israel business news - www.globes-online.com - on October 7, 2008
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