Yuval Steinitz
Yuval Steinitz. Photo by Tomer Appelbaum
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The government has given in to pressure from business tycoons regarding a bill to limit the concentration of economic power. Big business will get six years instead of four to adapt conglomerates to the new legal requirements.

The tycoons will get more time to adapt to provisions that would bar certain cross-ownerships of financial and nonfinancial firms. They will also have to limit their conglomerates to two-tiered control pyramids.

The change in the government's stance was confirmed by sources close to the matter on Sunday after the law against the concentration of economic interests was passed by the Ministerial Committee for Legislation.

The sources said the extension of the bill's time frame stemmed from a compromise after virtually all major business figures affected requested even more time - eight years - to adapt their operations.

A panel called the Committee on Enhancing Competitiveness in the Economy, which was chaired by a former director general of the Finance Ministry, Haim Shani, had recommended a four-year transition period. It is not clear who backed the longer time period.

A source said Finance Minister Yuval Steinitz surprised some of the participants by raising the issue; he had never spoken about extending the period before. But sources said Steinitz's support for an extension was limited to new control pyramids. He said pyramids would normally be limited to two levels, but a third would be allowed if it was sold off during a defined period.

Other sources said it was the minister of trade, industry and labor, Shalom Simhon, who sought to extend the time period, but his office said his position was no different from Steinitz's. Other sources said the idea for a six-year transition period came from Justice Minister Yaakov Neeman.

The draft that was ultimately approved was also changed regarding its treatment of tycoons who fail to divest within the required time. The original version provided for the appointment of a receiver who would sell off the necessary companies. The final bill was opposed by Yisrael Beiteinu, but it will now be submitted to the Knesset with the changes in the coming weeks.

Instead of a receiver, the final bill envisions a trustee if the companies are not divested in time. Steinitz was said to support the change, believing that a trustee could consider broader business implications than simply selling off assets.

It is still not clear what the status of a controlling shareholder would be during a period of forced divestments, or whether the shares of the companies being sold would become dormant.

There was also a change regarding the provisions for financial firms managing more than NIS 40 billion, whose owners would be barred from controlling major nonfinancial firms. Steinitz suggested, apparently in coordination with the Bank of Israel, that the NIS 40 billion figure be linked to inflation.