Diplomat for investors: We will not be harmed by the law of settlements

The Treasury’s submission to the importers led Diplomat to remove the warning of the expected damage to its results

Diplomat breathes a sigh of relief – the folding of the Ministry of Finance removed the fear of damage to Diplomat’s results. Two weeks after she reported to investors that the plan to reduce concentration in the food market will have a material adverse effect on the company’s results, the importer of food and consumer products released a calming siren yesterday. The company reported to the investors that “the proposal in the format that was brought to the government’s approval, and which was expected to affect the company in a materially negative way, was not approved.”

As I recall, the Ministry of Finance’s plan to reduce centralization and increase competition in the food and toiletry market mainly included a section with a temporary order for five years according to which a large supplier could supply supplies from only one large manufacturer as well as supply supplies that it itself produces as a medium-sized manufacturer. The meaning for Diplomat was, for example, renouncing the continued supply of products from Mondelez and other medium-sized companies, so that it could continue to market the products of the Procter & Gamble concern. Against the backdrop of the loss of revenue that this move caused, the company warned that its results would be harmed.

However, in the hearing conducted by the ministry, concerns were raised by small producers that the move would harm them because they would be forced to establish a trade department to carry out sales to retailers for them. These were suppliers whose sales were a little over NIS 20 million, the set threshold above which the supplier is defined as medium. Instead of trying to change the definitions, the ministry chose to withdraw from the program and removed the section from the Arrangements Law. The removal of the clause removed the threat to a diplomat and other importers. The company, which last week received the approval of the Commissioner of Competition for the acquisition of control (51%) in Dorot, also stated that two additional clauses in the legal memorandum concerning the merger between a large and medium-sized supplier and discounts to retailers are not expected to harm it.