"No antitrust authority in the world would have closed the Cadbury-Elite case as it was closed in 2006, and no one in the market understands why this case was closed with a negligible fine. This was a very strange settlement," an antitrust expert told "Globes" about the Cadbury-Elite case.
The case began in 2002, when Britain's Cadbury, one of the world's largest chocolate manufacturer, sought to enter the Israeli market, in competition against Strauss unit Elite. The venture failed following Elite's aggressive response.
On Thursday, the hearings in the NIS 36 million civil case filed by Cadbury importer Carmit Candy Industries Ltd. (TASE: CMRT) against Elite, now an integral unit of Strauss Group Ltd. (TASE:STRS) and some of its executives at the time began. Carmit accuses Elite of using its monopoly power to prevent the entry of Cadbury chocolates into the market. After investigating the allegations, the Antitrust Authority settled the case with a NIS 5 million fine and Elite's agreement not to act similarly in the future.
Carmit's civil suit is partly based on information and documents collected by the Antitrust Authority in its investigation, some of which were published by the media last week, along with excepts from the transcriptions of the investigation. Carmit submitted this material to the Tel Aviv District Court. The material includes statements by suppliers and wholesalers that Elite threatened to rescind discounts on its products if they sold Cadbury products, as well as material collected by Antitrust Authority investigators in a raid on Elite's offices in 2003, which show a clear strategy to block Cadbury's entry into the market.
In 2010, Kraft Foods Group Inc. (Nasdaq: KRFT) acquired Cadbury for $18.9 billion.
In its statement of defense, Elite and its executives deny all of Carmit's charges. Elite says that there was a reason why the Antitrust Authority investigation ended with a settlement. It says that Carmit's case is "groundless", and that what Carmit calls the "Elite-Carmit-Cadbury" case involved at most changes in Elite's discounts to one grocery store and two kiosks among the 10,000 grocery stores and kiosks operating in Israel, and to only two of the scores of wholesalers in the country and for just one month.
Elite says that Carmit has not even minimally detailed the serious offenses it alleges Elite committed. "Reading the statement of claim's 21 pages… in an attempt to discover one incident of the claim - what exactly was done and who carried out the alleged Mafiosi acts - show nothing."
Published by Globes [online], Israel business news - www.globes-online.com - on January 12, 2014
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