Trust buster may limit bank loans for competing firms
Antitrust Commissioner Dror Strum is considering putting limitations on the concentration of bank credit when a bank finances two competitors and can therefore dictate market conditions.
Antitrust Commissioner Dror Strum is considering putting limitations on the concentration of bank credit when a bank finances two competitors and can therefore dictate market conditions. The issue has come up recently as a result of Bank Leumi's dominance in financing the operations of both cable companies and their main competitor, the Yes satellite company. Strum says that such situations can potentially harm competition, with the bank effectively determining the level of competition in the market. The bank could, for example, make a loan conditional on setting a minimum subscriber price, thus limiting competition among companies.
Strum yesterday confirmed that his office is in the first stages of looking at this problem as part of a policy to investigate possible antitrust problems stemming from loan sources. Until now, bank loan issues have been dealt with by the supervisor of the banks, but Strum is convinced that in some cases, antitrust issues have arisen which fall under his purview as well.
Bank Leumi is the principal financing source of cable TV companies Tevel, Matav and Golden Lines as well as Yes. These companies owe banks a total of some NIS 7 billion, most of it to Bank Leumi.
Tevel hinted at the potential antitrust problems when, in the financial reports of its parent company, Discount Investments, in November 2001, it emerged that Tevel had received interim funding by banks conditional on its reaching certain goals, such as a specified number of subscribers or profit ratio per subscriber.
Strum is convinced that if a bank finances two major competitors in a sector, these kinds of financing conditions can serve to stymie competition, while "making life easier" for the banks and increasing the safety of their loans.