print gohome
jpost
 
Print Edition
Photo by: Marc Israel Sellem/The Jerusalem Post
Law meant to restructure economy, reduce concentration, passes 72-0
By LAHAV HARKOV AND NIV ELIS
10/12/2013
The legislation breaks up so-called pyramid companies, or firms with subsidiaries that own more of these.
 
The Knesset authorized a bill 72-0, to reduce concentration in the market, in its final vote Monday night.

“Passing the Market Concentration Bill is good and encouraging news for the future of the Israeli market,” Knesset Finance Committee chairman Nissan Slomiansky (Bayit Yehudi) said, presenting the legislation to the plenum.

“Today, we radically changed the structure of the market and made it suit the needs and interests of the public.”

According to Slomiansky, the bill will end a situation in which “the public’s money was taken advantage of by a small number of wealthy people for their own welfare,” bringing money back to the public and protecting savings and pension funds.

The complex bill has several functions meant to change the economy’s structure.

The legislation breaks up so-called pyramid companies, or firms with subsidiaries that own more of these, by forbidding the creation of more than two levels of subsidiaries.

Existing pyramids will have to break up over the next four to six years, depending on their size.

Pyramids were seen as allowing individual companies and, more specifically, their major shareholders, too much influence.

The new restrictions on the corporate structure is expected to lead to several years of highlevel sales, mergers and acquisitions, as pyramids are forced to restructure or sell perfectly healthy companies on the open market.

“From now on, Israelis can only see pyramids in Egypt,” Slomiansky quipped.

The legislation also sets a definition for companies that have too much heft in the market, exposing them to regulatory scrutiny that would make it harder, for example, to get government tenders or licenses.

Such companies are those that have more than NIS 6 b. in annual sales, over NIS 40 b. in financial assets, constitute 50 percent or more of its particular field, and have 10 franchises in more than four sectors of the economy.

In addition, there will be a separation between “real” economic institutions, and financial institutions.

A Supermarket or a software company, for example, that make “real” things cannot be attached to a bank, insurance provider or credit card company – such combinations could lead to conflicts of interests.

“This will increase competition in the market, reduce the influence wealthy people have on decision-makers and put the public’s interests at the head of the government’s economic priorities,” Slomiansky said.

Though many opposition MKs had positive things to say about the bill’s intentions, the debate lasted nearly five hours, as part of an attempt to filibuster the next bill on the agenda, which is meant to curb illegal African migration.

Meretz leader Zehava Gal-On expressed concern that the legislation will not reach its goal.

“The government turned the market into an arena that gives tycoons public property on a silver platter.

Time and again we see the government work for the interests of the few, not the wider public,” she said.

Gal-On said that “despite the significant steps taken by the bill, it will allow tycoons to continue milking public funds.

Although this is better than the original draft submitted by the government, the law needs to be more courageous.”
print gohome
print
All rights reserved © 1995 - 2012 The Jerusalem Post.