Finance chair: Cross-ownership endangers our democracy

Members of the Knesset Finance Committee spoke in favor of cracking down on cross-ownership of financial and non-financial holdings.

By NADAV SHEMER
October 27, 2011 04:25
2 minute read.
MK Moshe Gafni

MK Moshe Gafni 311. (photo credit: Courtesy)

Members of the Knesset Finance Committee spoke in favor of cracking down on cross-ownership of financial and non-financial holdings during a debate Wednesday on proposals made by a committee on market concentration.

“Economic concentration causes real harm to competition and endangers democracy. The fact that a very small amount of people simultaneously control financial and non-financial holdings, and even media companies, is unacceptable,” Finance Committee Chairman Moshe Gafni (UTJ) said.

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“We could find ourselves in a situation in which a small number of groups with a huge amount of power – part of which they obtained from state funding – could raise prices, and that nobody would say a thing and the media would not raise criticism because those same people are in charge there, too. This is an apocalyptic forecast, but it could happen.”

The Committee on Strengthening Market Competitiveness released its report in September, recommending a prohibition on control of financial institutions by large non-financial corporations, or by companies which control large non-financial corporations. It defined large financial corporations as companies with NIS 50 billion, or more, in assets under management and large non-financials as companies with more than NIS 8 billion in sales.

That committee’s chairman, Finance Ministry Director-General Haim Shani, told the Knesset Finance Committee that in comparison to the rest of the world, “the Israeli economy is one of the most highly concentrated, in that 10 large groups hold 41% of the value of public companies.”

MK Shai Hermesh (Kadima) argued the committee did not touch on concentration within specific industries, and therefore “missed out on a major source of harm to competition.”

MK Zahava Gal-On (Meretz) also criticized the committee, calling its conclusions “too restrained.” She added: “Tycoons like Sheri Arison and Nochi Dankner will be able to evade these recommendations.”

Gal-On said lawmakers should legislate for the complete separation of financial and non-financial holdings, “beginning with the first shekel.”

Prof. Eugene Kandel, chairman of the National Economic Council in the Prime Minister’s Office and a member of the concentration committee, said the recommendations had “far-reaching consequences,” and warned against taking any more dramatic steps that could harm the economy.

Final recommendations will be submitted to the cabinet within two months, after public submissions have been heard.


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