Manischewitz Fined $1 Million for Fixing the Price of Matzah

The B. Manischewitz Company, which claims to be the largest matzah maker in the world, has been fined $1 million for conspiring to fix the price of matzah over five Passover seasons from 1982 to 1986.

After being indicted by a federal grand jury in March 1990, the Jersey City, N.J., firm pleaded no contest to the charges that it conspired, with Horowitz Bros. and Margareten, and with Aron Streit Inc., to fix matzah prices.

In levying the fine last Friday, Judge Harold Ackerman of the U.S. District Court in Newark, N.J., said it is “warranted as the just deserts for Manischewitz conduct.”

The hefty fine is to punish Manischewitz for the “serious and evil offense” it committed and to send a message to the business community that such “an egregious assault on a free, competitive society” will not be tolerated.

The fine in the criminal case comes shortly after the company agreed to a $2,575,000 settlement of federal and California class-action law-suits by consumers who claim they were harmed by the price-fixing. The proposed settlement still requires the approval of the judge in each case.

Once approved, the settlements will provide $575,000 in cash and $2 million in food to charitable organizations approved by the parties and the judges.

Court documents allege that sometime after July 1981, at a meeting at Ratner’s kosher dairy restaurant on New York’s lower East Side, Manischewitz’s general sales manager asked top managers of Horowitz Bros. and Margareten if their company would adhere to Manischewitz’s proposed price increases for Passover 1982.

Horowitz Bros. allegedly agreed that year and after subsequent meetings preceding Passover in 1983, 1984, 1985 and 1986. Horowitz Bros. was purchased by Manischewitz in 1986.

The general sales manager allegedly had similar meetings in at least two of those years at a Jersey City motel with a sales manager for Aron Streit, Inc., who also agreed to the fixed price increases, court records say.

COMPANY DID NOT COOPERATE

While the government did not indict the other firms, it did name the senior executives from all of the companies in its list of unindicted co-conspirators.

That list included Robert Starr, Manischewitz president; Stanley Bauman, Manischewitz sales manager; and Philip Goldberg, a former sales manager who is a company consultant.

It also named Harold Margareten, the great-grandson of Horowitz’s founder, and his son, Jacob Margareten, as well as Jack Streit, co-owner of Aron Streit, and his son-in-law, Stanley Yagoda, a former Streit sales manager.

The government prosecutors said that Manischewitz did not cooperate with the investigation in any way and that they had to make “herculean” efforts to supply records and witnesses.

Starr said through a secretary that the company would have no comment.

Conservative rabbis, at their recent annual convention, overwhelmingly voted to summon Manischewitz and the other companies allegedly involved before a Din Torah, a rabbinic court, to answer the charges and possibly pay reparations to the Jewish community.

The rabbis condemned the collusion between the matzah manufacturers, calling it “hillul ha-Shem” (desecration of God’s name), as well as “an act of outright fraudulence clearly in violation of halachic principles and Jewish ethics.”

But no formal action has yet been taken, according to Rabbi Joel Meyers, Rabbinical Assembly executive director, because the organization is in the process of reviewing court records and was waiting for the criminal trial to end.

But if Manischewitz refuses to appear before the rabbinical court, “it is possible that the Rabbinical Assembly could make a public campaign against them before next Passover,” said Rabbi Mark Loeb, chairman of the Rabbinical Assembly resolutions committee.

“I personally wouldn’t buy another Manischewitz product” until the company “respond(s) to the charges of defrauding the Jewish people,” he said, adding: “I would urge other Jews to be equally selective.”

The $1 million fine Manischewitz faces is significant, considering that all sales of kosher-for-Passover foods total $20 million a year and that the company reportedly earned a net income of just $2.5 million in 1990.

Kohlberg and Co., a merchant banking firm, acquired Manischewitz in January for $42.5 million. It is now a subsidiary of Mano Holdings, Inc.

In 1983, Manischewitz purchased rights to make matzah under the A. Goodman and Sons label. With its 1986 acquisition of Horowitz and Margareten, the company controls three of the four major matzah brands and 90 percent of the Passover matzah market.

Comay, 53, had just been re-elected to his third one-year term as AJCommittee’s 21st national president.

Comay, who served as Pittsburgh’s first housing magistrate, was a lawyer and businessman active in a variety of civic causes.

He was chairman of the- board at Action Industries, a manufacturer of promotional programs for the retail trades. Prior to that, he had been a partner in a local law firm.

According to grief-stricken colleagues, Comay brought intense concern, commitment and thoughtfulness to every endeavor he pursued.

He “had extraordinary gifts: strong leadership, universal compassion, clear vision of the future and total dedication to the welfare of the entire human family,” said a statement issued by AJCommittee.

Comay served as chairman of the Pittsburgh United Jewish Federation’s budget and allocation committee, as treasurer of the UJF and a member of its board.

He was a member of the President’s Council of Brandeis University, where he earned his undergraduate degree before graduating from University of Pittsburgh Law School.