Gad and Kfar Tabor dairies withdrew the merger request

Both companies decided not to appear at the hearing to which they were invited by the Authority to express their position, and they came to the conclusion that the chances of approval of the merger were slim anyway. The companies informed the Authority about this.

The Authority’s inspection revealed that the two companies dominate the institutional cheese market, and that a merger between them could have led to sharp price increases in the institutional market. This market includes hotels, restaurants, bakeries and the like. It is mainly about three types of cheese in the core areas of Kfar Tabor: mozzarella, mascarpone and ricotta. Contrast Gad Dairies, Also active in the retail market, Kfar Tabor operates only in the institutional market and its annual turnover amounts to approximately NIS 90 million. Gad agreed on the purchase of the small dairy for NIS 75 million. In the areas of these cheeses, by the way, Tnuva and Terra, the leaders of the dairy products market, are only secondary players. Tabor Dairies is owned by the veteran food entrepreneur Shaya Tanzer and his son Shaf (previously one of the owners of a frozen dough factory Shaf).

This is the third merger in the food and retail sector to be removed from the chapter this year due to the opposition of the competition authority. The Authority objected to Strauss’s purchase of the Weiler farm tofu producer due to the fear of blocking the entry of additional competitors into the field as a result of the deal, as well as fear that the merger would prevent Weiler from entering the field of milk substitute drinks in which Strauss is active through the merger with Alpro.

After the deal was rejected, the Green Lantern Fund managed by Richie Hunter signed a deal to buy 50% of the Weiler network, and entered Strauss Shoes, although Strauss bought 51% of the shares in the original deal. Green Lantern also owns Gad Dairies together with Ezra Cohen and Discount Capital, so while it benefited from the disqualification of a deal by the Authority, it suffers from the disqualification of another deal, its own.

Another deal that the authority rejected last week was the purchase of Erza wineries In the hands of Carmel Wineries. The findings of the Authority’s inspection revealed that in the field of cider, the financial market share of the merged firm exceeds 50%, so that after the merger, the merged firm will be the largest and most significant company in the field, and that there are indications that Carmel Winery has significant market power in this field. In the field of Kiddush wine, it was found that the financial market share of Carmel Wineries exceeds 50% and that the expected financial market share of the merged firm exceeds 60%.

The food sector, therefore, receives special attention in the Authority in light of the increase in the cost of living and the central role of the food market in rising prices. Disallowing three merger transactions in the food sector in less than a year is a rare event, and the Authority usually rejects one merger per year. On the other hand, the competition commissioner Michal Cohen did not prevent Persal from strengthening this year with the purchase of Dan Deal, a large stock chain that it purchased for NIS 109 million. Although this is an area in which Shufersal does not play, and this was a main motive for the approval, the purchase strengthens its already enormous power in the retail market and in its power relations with suppliers.