shekel versus dollar 521.
(photo credit: REUTERS)
The Committee on Strengthening Market Competitiveness submitted its interim
findings to the government on Monday, recommending that business magnates be
banned from simultaneously controlling large financial and non-financial
RELATED:Knesset to discuss effect of US economic crisis on Israel Five myths about our tycoons
Prime Minister Binyamin Netanyahu said at a press
conference in Jerusalem that the committee - which took almost a year to reach
its conclusions – was established to help address the high cost of living, which
he said was the result of a lack of competition.
One of the panel’s key
recommendations was to enforce the separation of financial and non-financial
holdings by prohibiting large non-financial corporations or companies controlling
large non-financial corporations from controlling financial
According to the committee’s definition, a large financial
corporation is a company that has NIS 50 billion or more in assets under
management, and a large non-financial corporation is a company with more than
NIS 8 billion in sales.
Large companies will now have a chance to respond
to the draft report. According to the business daily Globes, holdings that
should escape scrutiny because of the committee’s definitions will include Nochi
Dankner’s control of supermarket chain Shufersal, Shari Arison’s control of
Shikun U’binui Holdings and Bank Hapoalim, and Apax Partners’ control of leading
food manufacturer Tnuva and Psagot Investment House.
However, Globes said
Dankner’s IDB Holding Corp.
will have to give up its controlling share in
Clal Insurance, and Yitzhak Tshuva’s Delek Group will likewise have to give up
control of Phoenix Holdings. It said Zadik Bino will be given a choice between
selling Paz Oil Company and First International Bank of Israel.
recommendations are approved, controlling shareholders in both large financial
and large non-financial institutions will have four years in which to sell one
Netanyahu said the report would be submitted to the cabinet
within three months but warned that while the aim was to increase competition,
it must not damage Israel’s business sector.
“We don’t want to harm
business growth. Businesspeople lead the way in the economy, create jobs and are
important to the market. They are friends of the Israeli economy and we must
ensure that continues,” Netanyahu said.
The committee, more commonly
known as “the committee on market concentration,” also recommended ways
to break up holding companies with a pyramid structure, called for the
Antitrust Authority’s powers to be expanded, and said the authority’s
should be tasked with examining the effects that privatizing large
infrastructure and natural resources companies have on market
In its conclusions on holding companies with pyramid
structures, the committee argued against imposing restrictions, recommending
instead that they be regulated through the tools of corporate
This way, it said, investors will be able to decide when a
pyramid structure benefits them or whether it serves only the controlling
Finance Minister Yuval Steinitz and Bank of
Israel Governor Stanley Fischer, speaking at the press conference, both praised
the committee for its findings.
Steinitz applauded its suggestion on
separating control of financial and non-financial institutions. Implementation
of the recommendations “will lead to a more efficient distribution of market
capital,” he said, and to the continuation of the Israeli economy’s ongoing