Ronit Kan
Ronit Kan Photo by Tomer Appelbaum
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The Ministerial Committee for Legislation decided yesterday it would support proposed legislation that would grant the Antitrust Authority legal power to act to increase competition in industries in which a small number of firms have excessive economic power. Such a situation of concentrated power is defined as when a small number of companies control over 50% of the market in any sector, such as in cellular phones, banking, insurance or energy.

The bill will most likely only reach the Knesset plenum in October after the summer recess.

The Antitrust Authority expects industry lobbyists to apply heavy pressure on MKs to vote against the legislation.

"The proposal is truly good news for the Israeli economy and consumer," said Antitrust Commissioner Ronit Kan yesterday to TheMarker.

"We know of various markets which suffer from the problem of [economic] concentration. The authority's ability to examine them and act to prevent anti-competitive [behavior] is good news. When the legislation is completed, the authority will have to examine the various sectors and prioritize the handling of them. These are not short or quick processes," she added. "We will not necessarily act in markets where other regulators operate."

The proposed law will allow the authority to act in industries with little competition to reduce entry barriers for new competitors, to ease the movement of customers between companies and to increase competition. The intention is to improve the position of the consumer vis-a-vis small groups of powerful firms in an industry.

Other regulators already exist in some industries - such as the supervisor of banks in banking, the Communications Ministry in the cellular market, and the treasury's commissioner of capital markets in the insurance and pension sector.

To gain Finance Minister Yuval Steinitz's support, promoters of the bill will ask the Antitrust Authority to coordinate with existing regulators in some cases, and in others to receive formal approval from the relevant regulators.

"The conditions do not exempt the banks and insurance companies from the legislation," said Kan.

"The proposed law states that if there is a danger that using [antitrust] powers will harm stability in a systematic way, then the relevant regulator will have the right of veto. That does not mean the Antitrust Authority cannot act in the sector," she added.

The legislation would allow the authority to declare an industry such as banking or insurance a "concentration group" and, for example, impose restrictions to increase competition, such as ordering banks not to transfer certain information between them, or to require them to provide specific information to consumers.

The authority originally proposed an even more sweeping law two years ago, but it was shelved as other regulators, and interested parties, objected.