Dairy mammoth Tnuva to pay NIS 25 million for price fixing — report
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Dairy mammoth Tnuva to pay NIS 25 million for price fixing — report

Chinese-owned conglomerate will admit to forcing grocery chains to set prices to eliminate competition; will give consumers NIS 25 each

Tnuva cottage cheese in a Jerusalem supermarket.(photo credit: Nati Shohat/Flash90)
Tnuva cottage cheese in a Jerusalem supermarket.(photo credit: Nati Shohat/Flash90)

Dairy giant Tnuva is expected to admit to price fixing Sunday and pay an NIS 25 million settlement to consumers after a years-long investigation into allegations of illegal business practices.

The food conglomerate, a major supplier of dairy and meat products, will admit that it carried out a scheme to force grocery chains to set prices it determined on Tnuva products in order to eliminate competition between 2008 and 2011, according to several Hebrew media reports Saturday.

It also allegedly forced chains to set prices of products made by other companies at the same level as the Tnuva products in order to eliminate competition, according to reports on the settlement.

The estimated NIS 25 million (about $7 million) will be paid to consumers who bought Tnuva products from the Mega or Shufersal grocery chains in the last month, via direct transfer to credit cards, according to The Marker business daily, citing sources in Israel’s Antitrust Authority. Some million consumers will get NIS 25 each.

The settlement also includes NIS 75,000 in fines to be paid by two former executives.

A demonstration against Tnuva, in a Mega supermarket in Modiin on September, 13 2011. (Jorge Novominsky/Flash90)

Tnuva’s cottage cheese prices were at the heart of a consumer boycott of the company in 2011, when a Facebook group called on the public to stop buying the product, which is perceived as a basic staple in Israel. The protest sparked mass demonstrations on the cost of living in Israel and succeeded in lowering consumer prices.

The settlement, reportedly to be announced Sunday, was described as the largest ever antitrust decision against an Israeli food producer. However, a source in the company downplayed the decision.

“It seems the big Tnuva case wasn’t so big after all. Five years of investigations by the Antitrust Authority ends without a single indictment,” the unnamed source told The Marker.

A Tnuva plant near Jerusalem on May 1, 2015. (Miriam Alster/Flash90)

The company, founded over 80 years ago as a cooperative owned by kibbutz dairy farmers and long seen as an Israeli icon, is currently owned by China’s Bright Food Group, which bought a controlling stake in 2014 at an NIS 8.6 billion valuation. At the time of the alleged price fixing, it was owned by London-based Apax.

In 2003, Tnuva was cited by the Antitrust Authority for price fixing in the poultry market by forcing slaughterhouses to set quotas. The decision was seen as a major factor in opening up the poultry market in Israel.

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