During a heated discussion in the Knesset Economic Affairs Committee on the cost of living in Israel, Committee Chairman MK Michael Biton (Blue&White) and MK Ofir Sofer (Religious Zionism) asked Rami Levy, owner of the supermarket chain that bears his name, to reveal his company’s gross profit margin and accused him of deceiving the public. In response, Levy said he did not know who those MKs were, at which point Chairman Biton expelled him from the meeting, saying, “You will not speak disrespectfully like that in here.”
Rami Levy was quite combative during the debate, standing out among the other supermarket chains and food manufacturers owners and lobbyists in the room. When Biton asked the heads of the supermarket chains whether their profits did not justify a government price freeze, Levy replied: “Then freeze the property tax and the price of electricity as well.” Shufersal supermarket chain CEO Itzik Abercohen, who was also angry with the questions but maintained his decorum, said Shufersal’s profit margin is the same as other supermarket chains around the world. Levy then interjected that the state was responsible for the high prices.
Last week, after it was reported that Shufersal, Israel’s largest supermarket chain, was offering a website that targeted Haredi shoppers with lower prices than those on its mainstream shopping site, Shufersal responded to the public outcry by suspending its discounted website (Leftist Coalition MK Goes After Supermarket Chain that Favors Haredi Shoppers). On Tuesday this week, Competition Authority agents raided the offices of the Shufersal and Victory supermarket chains, of giant food producer Strauss Group, and food importer Diplomat Holdings, on suspicion of violating fair market competition laws (Competition Authority Raids Shufersal Supermarket Chain, Strauss Foods).
The senior executives of the chains under investigation are expected to be interrogated yet again on Thursday by the Competition Authority. The investigation does not focus only on the suspicion of price-fixing among the various marketing chains—based on their reports to the stock exchange or media interviews in which they allegedly created an atmosphere of rising prices—but also on suspicion that food manufacturers have offered benefits to the chains in exchange for their raising prices.
One suspicion concerns the private label of the marketing chains, involving products that are produced on the same production line but are offered by the chains at a cheaper price. The Competition Authority suspects that food manufacturers offered the chains an exchange: in return for raising food prices of the known brands, the food companies would let the chains maintain the lower prices of their private-label goods. This way both the food makers and the chains win, and the consumers lose.
Meanwhile, on Wednesday more computer drives and documents from the Strauss and Shufersal headquarters were confiscated, in addition to the continued interrogation of senior executives of the chains and food manufacturers. In his Tuesday’s interrogation, Shufersal CEO Itzik Abercohen denied the suspicions of price coordination. Noam Weiman, CEO of the Diplomat chain, was questioned with a warning. Victory chain CEO Eyal Ravid was also summoned to an interrogation to clarify why he had warned of a “tsunami of rising prices” a few weeks ago.