Prime Minister Benjamin Netanyahu
Prime Minister Benjamin Netanyahu addressing the TheMarker Markets Conference in Tel Aviv on Wednesday June 9, 2010. Photo by Nir Keidar
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Prime Minister Benjamin Netanyahu supports the proposed law on reducing centralization of economic power in the hands of a few business groups, despite the objections of a number of his ministers and ministries, sources close to Netanyahu said yesterday. They said Netanyahu plans to include the law in his ideas for increasing competition in the Israeli economy.


The draft bill, promoted by Antitrust Commissioner Ronit Kan, grants the Antitrust Authority broad powers to intervene in various regulatory areas that are outside its purview today. For example, the Antitrust Authority would be allowed to confront the banks or cellular phone operators to encourage competition, which would lead to lower prices for consumers.


Today, the regulation of banks is entrusted to the Bank of Israel and its supervisor of banks, while the cellular firms fall under the regulatory auspices of the Communications Ministry.


Vive la différence

But there is a difference between “concentration groups” and “economic concentration.” According to the bill, concentration groups are defined as companies that operate in a business sector where there is little competition among the groups. In practice, there is often little or no competition over customers − at least as far as lowering prices is concerned. For example, when one bank raises its fees, all the other banks follow suit quickly.


On the other hand, concentration is generally defined as rich people’s cross-holdings in companies in various business sectors, which increases the economic power of the owners.


Other regulators object to Kan’s proposals, including the Bank of Israel and the ministries of national infrastructure, finance and communications.


The Antitrust Authority has tried other proposals, but they have all been refused by the various ministries. Meanwhile, MK Amnon Cohen ‏(Shas‏) is pushing an alternative proposal, though it is similar to Kan’s.


A few weeks ago Netanyahu declared his intention to act to reduce the concentration of economic power in the Israeli economy, but he has yet to establish a framework or agency to implement it. 


One possibility being considered is the appointment of a committee headed by Eyal Gabai, the director general of the Prime Minister’s Office.