Netanyahu demands speed-up of anti-monopoly legislation
Corporate lobbyists to pressure MKs to vote it down.
The cabinet will discuss reducing economic concentration and increasing competition at its Sunday meeting, following Prime Minister Benjamin Netanyahu's pledge to speed up enactment of recommendations for reform.
Netanyahu asked Finance Minister Yuval Steinitz and Justice Minister Yaakov Neeman to bring legislative proposals to the cabinet as soon as possible so they can go to the Knesset for approval.
The real fight over the reforms is expected in the Knesset. The so-called tycoons and their army of lobbyists seem to be waiting for the opportunity to water down the legislation. Also, there are a number of MKs from the opposition who will join the fight against the bills. Knesset sources say big business interests have identified the Knesset as Netanyahu's weak link in passing the legislation.
A long road ahead
Prof. Eugene Kandel, head of the National Economic Council, and Oded Sarig, commissioner of insurance, capital markets and savings in the Finance Ministry, are preparing the proposals for the cabinet.
The recommendations call for limits on what institutional investors can lend a single borrower or group of borrowers, the goal being to preserve the stability of the institutions and the public money under their management. Such regulations are already in place for the country's banks.
The reforms also aim to limit existing control pyramids to no more than three levels - the company at the top, followed by its subsidiaries and its secondary subsidiaries.
Control pyramids are a popular way for publicly-traded companies to take over a wide range of other firms while making a minimal investment. The proposals seek to block formation of new pyramids by limiting them to no more than two levels.
In addition, a corporation would not be allowed to hold ownership in both a major financial institution and major non-financial company.
The question of when the cabinet will vote on the recommendations is still open. Steinitz is against voting next week, which puts him at odds with his staff and the Prime Minister's Office, sources said.
Steinitz, however, denied this and said he is in favor of a Sunday cabinet vote.
The proposals to be brought to the cabinet will include a requirement that government institutions consider the effect on competition and centralization in their decisions.
"Adopting the recommendations of the committee and legislating them will advance economic competition, improve efficiency in allocating resources, contribute to the stability of the financial system and increase economic growth and public welfare," said Sarig and Kandel.
While the economic concentration committee stopped short of calling for a complete separation between financial and non-financial companies, it determined that limits on acquisitions should apply to non-financial companies with annual turnover of at least NIS 6 billion. For companies that already have both financial and non-financial holdings, the limit should be NIS 7.5 billion.
Financial companies large enough to fall under the limits include those with assets worth NIS 40 billion. For companies that already own a cross-holding, it's NIS 60 billion.
Also, committee members said Israel might want to limit large corporations - financial or not - from holding media outlets. But this subject was not central to the panel's mandate, so instead of crafting specific recommendations, the committee merely called on the government to examine the issue.
The government should take competition into account during tenders and privatizations in consultation with the Antitrust Authority, the committee added.
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