Antritust Authority may block Golan-Cellcom deal

"A decision against approving the deal would signal to foreign investors that Israel does not respect the rules of conduct and OECD standards," says Golan.

March 28, 2016 17:54
1 minute read.
Israeli espionage

Shadowy figure uses cell phone (illustrative). (photo credit: INGIMAGE)

The Antitrust Authority is considering whether to block a proposed merger between Golan Telecom and Cellcom, and it summoned the companies to a meeting to air their concerns, Cellcom said Monday.

The Antitrust Authority said it would consider the companies’ responses to its concerns in a hearing next week and make a decision afterward.

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If allowed, the NIS 1.17 billion merger announced in November would consolidate two major players in the cellular market. A reform headed by then-communications minister Moshe Kahlon, who is now the finance minister, allowed entry of new companies into the concentrated market in 2012 and helped bring down consumer prices and profits dramatically.

Golan was among the new players.

Kahlon has vowed to fight the sale, saying in November that the Finance Ministry has authority to block the deal, even if the Antitrust Authority, which is part of the Economy Ministry, chooses not to. His campaign platform centered around reducing market concentration in various sectors and passing the savings along to consumers.

Cellcom remains the larger provider, with 2.835 million subscribers as of December, according to the company. If it joins forces with Golan, it would control 40 percent of the market.

Blocking the deal would be a breach of international standards, Golan said. Other advanced economies have allowed deals that shrink players in a given market from five to four, it said.

“A decision against approving the deal would signal to foreign investors that Israel does not respect the rules of conduct and OECD standards,” Golan said.

Ilanit Sherf, an analyst at Psagot brokerage, said the Antitrust Authority cannot approve the deal in its current format. It wants Cellcom to offer changes to ensure competition will not be harmed, and a final deal appears to be a long way off, she said.

“In the longer term we find it difficult to see the continued existence of the current market structure,” Sherf said. “Imbalances and prices currently in the market will not remain with us forever.”

Reuters contributed to this report.

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