Knesset to Vote on Law Tightening Pyramid Structure of Israeli Businesses

Lawmakers agree to give holding groups six years to dismantle excess layers of their “pyramid” structure after the bill becomes law.

The Knesset Finance Committee is scheduled to vote on Tuesday on the Business Concentration Law, after lawmakers agreed to toughen its terms to permit no more than two tiers of chained ownership, committee chairman Nissan Slomiansky ‏(Habayit Hayehudi‏) said Monday.

However, lawmakers agreed to give holding groups six years to dismantle excess layers of their “pyramid” structure after the bill becomes law. That is two more years than the government panel proposing the law wanted to allow. That panel had also proposed limiting pyramids to two tiers only for new holding groups, while letting existing groups retain three.

A behind-the-scenes battle has developed over the past few days between the Finance Committee and the government over the toughened measures the committee wants to inject into the bill. Finance Minister Yair Lapid, Economics and Trade Minister Naftali Bennett and Justice Minister Tzipi Livni aren’t expected to favor pulling the bill from the Finance Committee. But the Prime Minister’s Office refused to disclose Prime Minister Benjamin Netanyahu’s position on these issues.

On Sunday, the Ministerial Committee for Legislation authorized Netanyahu, Lapid, Bennett and Livni to determine the government’s stand on the more stringent terms the Finance Committee has introduced into the bill. Netanyahu was added at the last minute and will head the panel.

MK Zahava Gal-On ‏(Meretz‏) voiced concern that the government might pull the toughened legislation. “Does it seem coincidental that the prime minister joined the ministerial committee?” she asked.

But Slomiansky said on Sunday that he was optimistic about the legislation. “The government wants us to work quickly on the bill and isn’t threatening to retract it,” he said.

Representatives of the business tycoons and others who had appeared before the Concentration Committee were also invited, but the only one who showed up was Natan Hetz, CEO of Alony Hetz Properties & Investments, who objected to allowing pyramids only two tiers.

“I felt I was walking into a done deal,” said Hetz. “Two layers shouldn’t be decreed in one fell swoop. You don’t exactly grasp the implications.”

Olivier Fitoussi