Antitrust Authority raids Tnuva offices

Investigators seized documents and took senior managers away for questioning.

Antitrust Authority investigators raided the offices of food company Tnuva in Glilot, near Herzliya, today. The raid was prompted by suspicions of violations of provisions of the Restrictive Trade Practices Law. The investigators seized documents, and senior managers have been taken away for questioning.

The suspicion against Tnuva is that it breached the agreed order regulating the relationship between retail chains and food suppliers. The order was promulgated by the director of the Antitrust Authority after he received the consent of the major supermarket chains and the major suppliers. It was intended to secure small and mid-size suppliers from being disadvantaged on supermarket shelves.

In late 2011, the Antitrust Authority opened an investigation into Tnuva on the suspicion that Tnuva concealed from the Authority the report prepared by consultancy McKinsey, which was exposed by "Globes". The McKinsey report, which found that Tnuva could raise prices of soft cheese products by at least 15% because demand for them was inelastic, could be used as evidence against Tnuva on the question of whether it exploited its monopolistic power in the market to raise prices unfairly, which is illegal.

As part of that investigation, there was a previous raid of Tnuva's offices at Glilot Junction, in which documents relating to pricing of the company's milk products were seized. In that affair, then Tnuva chairperson Zehavit Cohen and CEO Arik Shor were detained for questioning.

The current raid is part of a new Antitrust Authority investigation into Tnuva, and is unconnected to the previous investigation. As reported by "Globes", that previous investigation was concluded and the findings were reported to the Authority's legal department, which is due to decide whether to file indictments.

Published by Globes [online], Israel business news - www.globes-online.com - on July 16, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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