The Antitrust Authority has filed an indictment against Shufersal Ltd. (TASE:SAE;Pink Sheets: SSLTF), president Effi Rosenhaus, and VP trade Eli Gidur for breach of merger terms and restraint of trade.
The indictment states that Shufersal and its senior executives failed to comply with the terms of the supermarket's merger with Clubmarket, and that they attempted to create a cartel, with the objective of reducing competition between Shufersal and its competitors. The events that form the basis of the indictment were revealed by "Globes".
Rosenhaus said in response, "I regret the decision by the Antitrust Authority. Gidur and I have decided not to agree to any plea bargain offered us. Even though it appears that the punishment offered is ostensibly light, they require us to admit our guilt. We've decided to go to court and prove our innocence there."
The indictment states that, in December 2008, the media published ads for Hannukah sales by supermarket chain Blue Square Israel Ltd. (NYSE: BSI; TASE: BSI). The sales campaign included items at Blue Square's Mega and Mega in the City branches that were identical and/or similar to those offered for sale in advertising campaigns published by Shufersal on the same day. Blue Square's sales offered products at lower prices than the prices offered by Shufersal.
The indictment states that, following Blue Square's campaign, Rosenhaus and Gidur decided to contact suppliers whose products were included in the campaigns of both supermarket chains. Rosenhaus and Gidur sought to persuade the suppliers to pressure Blue Square to stop its campaign.
Antitrust Authority director general Ronit Kan said, "We take a harsh view of the breach of conditions we gave the company as part of the approval of the merger. The purpose of the conditions was to prevent harm to competition and restraint of trade."
In 2005, when Shufersal acquired bankrupt Clubmarket on the basis of the "failed business doctrine", the Antitrust Authority approved the merger with restrictions, aimed at, among other things, preventing harm to competition and consumers, and to enable competition to recover following Clubmarket's collapse and its takeover by Shufersal.
Shufersal is Israel's largest supermarket chain, Blue Square is the second largest, and Clubmarket, before its bankruptcy, was the third largest.
Shufersal is controlled by IDB Holding Corp. Ltd. (TASE:IDBH) unit Discount Investment Corporation (TASE: DISI), with a 38.05% stake. Shufersal's share rose 1.5% by midday today to NIS 21.72, giving a market cap of NIS 4.62 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on February 3, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010