The big supermarket chains and leading food producers and importers in Israel hooked up to make competition for smaller players more difficult, according to an investigation conducted by the Antitrust Authority.

A report in Haaretz notes that the investigation which started over a year ago indicates "clear evidence of an alliance between the leading retail chains with large producers and importers of foods and beverages." The report says that six or seven major food companies were probed. It adds that the Antitrust Authority checked whether the chain stores dictated low prices to companies as part of a special offer, and whether the big food companies "had paid in advance and were guaranteed a lot of shelf space at the expense of their smaller competitors."

The Antitrust Authority now denies mergers between large and small, cheaper supermarkets, in view of the power the big chains gained in recent years. Antitrust Commissioner Dror Strum prohibited Co-Op Blue Square from acquiring a small supermarket store. The Authority will soon decide whether to indict or to make do with an agreed code to be followed in the future. "The code will be based on the English code regulating the activity of chain stores so that competition among vendors stay intact," the report says.

By Aaron Priel, correspondent