More than a decade after the cottage protest, the Supreme Court today (Monday) accepted the appeal filed by Tnuva on Verdict which stated that she charged an excessive and unfair price for a cottage between the years 2009-2011, within which she was charged with compensation to the public in the amount of NIS 20 million.
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The lawsuit filed by attorney Ofir Naor, through lawyers Shahar Ben Meir and David Danino, against Tnuva, was born near what was called the “cottage protest” in the summer of 2011, when it was claimed that “cottage cheese prices in Israel rose unreasonably”.
the lawsuit It was approved as a class action in April 2016, in which the plaintiff claimed that during the aforementioned period, Tnuva set an unfair price for the cottage cheese, taking advantage of Tnuva’s position as a monopoly in the dairy and cottage market.
Supreme Court Justices Yael Wilner, Alex Stein and Ruth Ronen ruled today that it was not proven that Tnuva charged an extremely high and unfair price for the cottage.
“A cautious and restrained approach”
“The courts must take a particularly careful and restrained approach, when deciding on a class action that concerns the claim of setting an extremely high and unfair price. This is, essentially, due to the significant difficulties involved in examining such a claim, and due to the possibility that the acceptance of the class action in this context will harm, in the end talk, in competition and in public,” the judges stated.
The judges further determined that “the use of the excessive price reason should be done with restraint and restraint, especially in the context of class actions. As clarified above, the attempt to determine what is an extremely high and unfair price involves significant difficulties, which cannot be solved by legal means alone.
“Therefore, it is better that the competition authority’s warning stand before our eyes, according to which ‘a legal interpretation detached from the economic consequences may collapse the theoretical basis on which the antitrust laws stand, so that the enforcement of the ban on charging an unfairly high price will degenerate into arbitrariness.’ The courts must apply the present pretext with great caution and restraint, in accordance with the criteria stated above, and apply only in extreme and clear cases of consumer exploitation, which are ‘stabbing in the eye and obvious to all’ – both in terms of the level of the price, and in terms of its unfairness – taking into account, between The rest, for the economic consequences inherent in its application in the case in question.”
“Bottom line,” the judges noted, “a restrained and cautious approach as mentioned is necessary, lest the court fall into the position of ‘the supreme regulator of prices in the Israeli economy.’ in particular”.
“lacking factual infrastructure”
In the ruling, given almost three years since the appeal was filed, the Supreme Court stated that the district court did not establish clear data on Tnuva’s prices for the cottage, and did not specify the price that would have been determined under competition conditions.
It was further determined that the determination that Tnuva charged a significantly higher price than the price that would have been set in a competitive market, was made “on the basis of a missing factual basis and while basing it, also mined, on the rate of operating profits that Tnuva produced from the sale of a cottage.”
The supreme judges determined, among other things, that the cost test conducted by the district does not show a “significant gap” between the price of Tnuva’s cottage and its production costs.
As for the comparison between the rates of yield profits from a cottage and the average rate of profits of foreign companies, which was 12.1%, the Supreme Court ruled that this claim that yields are much higher – is not substantiated at all. Among other things, because no data was presented on the activities of the foreign companies or the environment of the markets in which they operate. Also in this matter, the supreme court stated that the profits of the foreign companies do not rule out the possibility that these companies are selling cottages in a competitive market at a rate of profit similar to the rate of profit from a cottage and even at a higher rate. Therefore, the comparison is not relevant and does not indicate a high price for the cottage.
As for the unfair price, the court referred to the fact that the consumers chose to purchase a Tnuva cottage during the lawsuit period, even though they could have purchased a cottage from the competitors, who supplied approximately 30% of the cottages on the market, and to the fact that following the social protest in 2011, Tnuva lowered the cottage prices on its own initiative which remain low until the date of the district ruling in 2020.
Tnuva was represented by attorneys Zvika Agmon, Yonatan Kehat, and Hanan Sidor from the Agmon office with Tulchinsky, along with attorneys Tal Eyal Boger, Nevo Shtrit, and Anbal Stroll from the Fisher office.
Attorney Shahar Ben Meir, who represented the representative plaintiff, Attorney Ofir Naor, said in response to the verdict: “We must regret the court’s approach, which in practice deletes the reason for an excessive price from the number of laws and in fact enables the high cost of living in Israel “.