PM Orders Panel to Attack Economic Concentration

Committee of 10 is to report back in four months.

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Prime Minister Benjamin Netanyahu decided last evening to establish a committee on economic concentration and ways to increase competition in the economy. The director general of the Prime Minister's Office, Eyal Gabai, and the director general of the Finance Ministry, Haim Shani, will jointly head the committee. Its conclusions on ways to increase competition will go to Netanyahu, Finance Minister Yuval Steinitz and the governor of the Bank of Israel, Stanley Fischer, within four months.

The new committee will discuss restricting large-scale pyramid-type holdings in public companies; strengthening corporate governance in public companies; the question of financial firms controlling non-financial firms; antitrust policy; and toughening the conditions for the purchase of state assets.

Haim Shani, co-chairman of the competition committee.Credit: David Bachar

The committee will recommend new legislation and other operative steps to the cabinet. Its goals are to improve protection for the public's financial assets; protection for investors in public companies; improving the stability of Israel's financial system - the banking system in particular; and improving economic competition and efficiency.

Netanyahu said yesterday he has been dealing with the matter of economic competition for many years. "The central question is how we can increase competition appropriately, and in a fashion that will encourage economic growth and stability, increase equality in income distribution and bring about a more equitable allocation of resources and a lower level of risk for entrepreneurs and investors," said Netanyahu.

The decisive meeting on whether or not to establish the official committee was held yesterday in Netanyahu's office in Jerusalem. Fischer, Steinitz and Zohar Goshen, chairman of the Israel Securities Authority, were in attendance, as were Shani; Gabai; the Bank of Israel's Supervisor of Banks, Rony Hizkiyahu; the treasury's commissioner of capital markets, insurance and savings, Oded Sarig; the head of National Economic Council, Eugene Kandel; and the head of the Bank of Israel's research department, Karnit Flug.

Steinitz praised the decision in a statement yesterday evening. "A courageous decision was made to establish a committee to examine in a professional and responsible fashion existing economic concentration [in Israel]." Steinitz said the committee bears the responsibility of determining the components of economic concentration and propose ways to deal with them.

Karnit Flug, Bank of Israel governor.Credit: Tomer Appelbaum

Netanyahu recommended the committee present its conclusions within two months, but attendees at the the meeting pressured him to extend the deadline.

The committee will have 10 members: three from the Finance Ministry, two from the Prime Minister's Office, two from the Bank of Israel and three others from three different public bodies.

Hizkiyahu and Flug will represent the central bank; Shani, Sarig and budgets director Udi Nissan will represent the Finance Ministry; and Gabai and Kandel will be the representatives of the PMO. This composition almost certainly ensures the committee's recommendations will be acceptable to Netanyahu, Steinitz and Fischer.

What the committee will not have is representatives of the public at large.

Eyal Gabbai, co-chairman of the committeeCredit: Emil Salman

All the participants at the meeting stated their positions economic concentration and its impact on the public and the economy, as well as possible solutions. Steinitz and Fischer presented the harshest positions against such concentration. Steinitz at first proposed his ministry deal with the matter, but Fischer objected strongly, saying the treasury was basing its policies on work done by the Bank of Israel. Later, Steinitz proposed an interministerial committee similar to that agreed upon.

The committee will hold its meetings in the Prime Minister's Office. The Finance Ministry, Bank of Israel and ISA will present the panel with the materials they have compiled over past months on the issue of economic concentration - before the committee starts holding its sessions.

The committee will also look at what has been done around the world about economic concentration, mostly examining developed nations with population size similar to Israel.

None of the participants in yesterday's meeting, it was decided, would speak to the press about the meeting.



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