Money cash Shekels currency 521.
(photo credit: Reuters)
Some of the country’s most powerful businesspeople will be forced to choose
between their financial and non-financial holdings, after the government-
appointed committee tasked with improving competition presented its final report
Prime Minister Binyamin Netanyahu, speaking at a press
conference in the capital alongside Finance Minister Yuval Steinitz, Bank of
Stanley Fischer and committee chairman Haim Shani, declared
the report as proof of his devotion to competition.
“I am opposed to
monopolies and cartels,” Netanyahu said.
The Committee on Strengthening
Market Competitiveness, as it is officially known, recommended enforcing
separation of financial and non-financial holdings by prohibiting control of
financial institutions by large non-financial corporations.
the guidelines set out in its preliminary report, defining a large financial
corporation as one with at least NIS 40 billion in assets under management, and
a large non-financial corporation as one with at least NIS 6b. in annual Israeli
Arison Holdings, Apax Partners, IDB Holding and Israel Corporation
could be among those forced to sell assets if the recommendations are
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Arison Holdings controls both Bank Hapoalim and Shikun
u’Binui (Housing & Construction Holding Company Limited), one of the
country’s largest infrastructure companies.
Apax controls both Psagot
Investment House and Tnuva, the country’s largest food manufacturer and
Corporations would have four years to comply with the
regulations once they are approved and published.
The committee also
recommended in its final report that new companies limit pyramid structures to a
maximum of two public levels, as opposed to the limit of three public layers it
would allow for existing companies.
The Israel Securities Exchange
expressed its reservation over this clause, arguing that new companies should be
allowed to maintain pyramid structures to the same extent as existing companies,
and that prohibiting a third layer is too radical a solution for the Israeli
Speaking at the press conference, Fischer emphasized that the
report was not an attack on the business sector, adding that although everyone
recognizes private businesses as central to the economy, the state must ensure
they operate efficiently and without influencing the political
“Sweden is often cited as an example of a state in which the
government is deeply involved in the provision of services, but it is important
to remember that in Sweden the government is hardly involved in production; it
is the private sector that produces, and the government buys from the private
sector,” Fischer said.
“We respect the private sector and understand that
in order for it to exist we must allow it to make profits, but those profits
must be derived within a framework that is acceptable to society and the country’s citizens.”
The committee released its preliminary report in
September, and completed its final report after hearing public
A Kadima Party spokesman said the document contained
appropriate recommendations that would help maintain a free economy. But he
slammed Netanyahu and Steinitz for convening a press conference on the report,
calling it another “in a long line of fireworks and pyrotechnic performances”
that the two have used to back up their claim that they are making historic
They did the same thing when they announced the housing reforms
and the Trajtenberg recommendations on socioeconomic change, the Kadima
spokesman said, adding: “These press conferences have turned into a joke, and
given the sad state in which Israel finds itself there is no room for
Labor Party leader Shelly Yacimovich also criticized Netanyahu
and Steinitz for the press conference, saying there was not a shred of truth to
their claims that they would reduce market concentration.
Steinitz have had an entire term to separate financial and non-financial
holdings, to deal with pyramids, to prevent deals between controlling
shareholders and to stop crossover transactions between directors. But they
chose not to do anything and to allow unruly behavior to continue in the
markets,” Yacimovich said.
“Now during what appears to be the 18th
Knesset’s last parliamentary session, their words have no value and are merely
electoral promises from which they cannot hide.”
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