An unprecedented decision by Israel’s Director of Anti-Cartel Authority aborted a proposed merger of Aviv Food with the country’s leading supermarket chain Blue Square, on the grounds that “Israel’s food chains use their status and strength to compel suppliers to grant them preferred conditions.” A report in Maariv states that the Director’s decision is considered “revolutionary” in the country’s food business sector, since it is the first time that a government authority takes a stand regarding commercial relationship between suppliers and the food chains.”

The decision is part of an analysis by the Anti-Cartel Authority pertaining to the market share held by the food chains, which is now 50% of the total food sales in the country, led by Blue Square and Supersol. The report states that the food chains are increasing their strength in recent years giving them tools to demand from suppliers to increase their share in advertising costs, entry to new locations and inaugurating new branches. In addition, the Authority welcomes the development and expansion of the low-price supermarket chains, of which there are several such small chains in the country, “as they serve as competitors and their operation is vital in a free market economy.” The report notes that the “preferred treatments” given by suppliers to the big chains are not translated into lowering prices of products for consumers.

By Aaron Priel, correspondent