Antitrust Authority director general Dror Strum has given a rare exemption for cooperation between an Israeli manufacturer and an international company, which jointly control 90% of the Israeli market in their field.
The recent approval permits the functional partial merger between Ducart International Paper Ltd., controlled by Kfar Masaryk, and International Paper (NYSE:IP), a partner in American Israeli Paper Mills (AMEX: AIP; TASE: AIP), and Elopak Israel, a subsidiary of Norway's Elopak AS.
Ducart and Elopak jointly control 90% of Israel's market for milk and beverages cartons. Ducart alone controls 60% of this market. Tetra Pak, the world's largest carton maker, controls 10% of the Israeli market.
Strum said that his reasons for the exemption was the availability of imports. Dairies told Strum that they could quickly and easily import packaging if prices for Israeli packaging rose, because there was no significant different between prices in Israel and overseas, and because of the power of the dairies' customers - Tnuva, Strauss-Elite (TASE:STEL) and Tara Dairies.
Ducart and Elopak Israel received permission to cooperate, but not to fully merge. Over the next three years, the two companies may market products separately or together. The can only fully merge their production, depending on its impact on the market.
Strum also ordered the removal of proposed exclusivity clauses in the merger agreement, which stipulated reciprocal exclusivity in marketing packaging in Israel. Ducart will therefore be able to independently compete against its joint venture with Elopak Israel.
Published by Globes [online], Israel business news - www.globes.co.il - on April 6, 2005