The Antitrust Authority will indict Strauss-Elite (TASE:STEL), its CEO, Giyora Bar Dea, and six other senior company officers in the Cadbury chocolate affair. The Antitrust Authority said its investigation found substantial evidence of possible illegal activity by Strauss-Elite, by blocking Cadbury chocolate sales.
The Antitrust Authority sent the draft indictment to Bar Dea and other company officers a few days ago, for a hearing to be held at the Antitrust Authority on the matter.
The Antitrust Authority investigation found prima facie evidence that when Cadbury entered Israel, Strauss-Elite violated the Restrictive Trade Practices Law (5748-1988) by threatening retailers with the cancellation of discounts for Elite products if they carried Cadbury products.
Cadbury entered Israel in December 2002 through Carmit. A few months later, the Antitrust Authority launched an investigation into Elite's arrangements with retailers, which included discounts and other benefits if they obstructed Cadbury.
Israel's chocolate market is estimated at NIS 1 billion, of which Elite controls 70%. Elite was declared a monopoly in the chocolate and coffee markets in 1989. In 1998, the Antitrust Authority forbade Elite, as a monopoly, from signing exclusivity agreements with its customers, and from granting benefits, discounts, or other financial advantage to distributors and retailers for buying Elite products or not buying products of other manufacturers.
Elite is therefore forbidden from punishing a retailer who sells competitors' products by withdrawing discounts from that retailer, or, conversely, from offering benefits to a retailer who undertakes not to sell Cadbury products or to sell Cadbury products in an inferior manner. Violating these rules are liable to constitute criminal offenses, punishable by up to five years imprisonment.
A Strauss-Elite spokesman said in response, "The company has operated in the food market for decades, with an emphasis on relationships and concern for consumers and retailers. We have always acted in accordance with Israeli law, and we will continue to do so in the future. We believe that we are innocent. We believe that our people and managers acted within the framework of accepted practice and Israeli law."
Published by Globes [online], Israel business news - www.globes.co.il - on December 30, 2004