Lobbyists in Overdrive as MKs Begin Debate on Concentration Law

Clause barring largest companies from bidding in tenders for state-controlled assets draws ire of big business.

Even before lawmakers began deliberations on the Business Concentration Law yesterday, major financial interests have been working overtime to water down sections of the legislation that would make it harder for them to gain control of state-owned assets, Knesset sources said.

The meetings with MKs have been mostly held behind the scenes, but the Knesset sources said they are expecting the pressure to intensify as the debate over the bill in the Finance Committee advances, since almost all of Israel's biggest companies would feel the law’s impact.

The section of the bill that has elicited so much opposition would bar the government from selling infrastructure assets, such as water, energy, roads, communications, mining, natural resources and financial infrastructure, to companies regarded as dominating various industries and market segments. The government would be required to prepare such a list.

A special committee could, however, choose to override the law in specific cases, but the committee would only be able to do so after examining the effect such a deal would have on competition and business concentration. The law’s aim is to enable new players to compete for such tenders and increase the level of competition throughout the economy.

Companies like Bezeq, Egged and The Israel Corporation appeared on a list released yesterday by Prime MInister Benjamin Netanyahu’s office of companies that control significant stakes in the country’s crucial infrastructure industries.

MK Nissan Slomiansky (Habayit Hayehudi), who chairs the Finance Committee, sought to play down the impact of lobbyists, but declined to name those with whom he has met.

“The current chapter in the bill worries many people in business and they come, talk and try to gently persuade,” Slomiansky said on Monday. “There is pressure, but not in the sense of someone coming to threaten me or offer me jobs.”

While he said that no MK was under any obligation to meet with lobbyists or business executives, he said it was a good idea to listen to them, just as they do to the views of government officials and regulators. He said he hoped to get the bill passed into law within two months.

MK Gila Gamliel (Likud), the coalition whip on the committee, denied that any lobbyist had contacted her or exerted pressure. “The MKs need to push back pressure from interested parties and lobbyists and work for the public good,” she said. “The law should be pushed through and passed as quickly as possible.”

Watchdog group: ‘Restrict more industries’

The Movement for Quality Government, a watchdog group, has already criticized the bill, saying in a letter to MKs that the list of areas of critical infrastructure covered by the bill should be expanded beyond the current 23 to include such areas as pension savings, air travel and medicine. It said the restrictions should also apply to companies that control less than half of a key market, noting that in its current form the law would only bar companies that are outright monopolies in their sectors.

According to the list, the telecommunications industry is dominated by Bezeq, which controls 65.8% of the market. In the area of Internet bandwidth, the market is likewise dominated by Bezeq, which controls 60% of Internet lines, followed by Hot Telecommunication Systems, which controls 40%. Cable broadcasting is split between Hot, which controls 58% of the market, followed by Yes, which controls 42%.

Among government-owned companies, postal services are dominated by Israel Post, the national postal company, with 68% of the market. Israel Electric Corporation controls nearly all of Israel’s electricity market while Mekorot Water Company controls 70% of the potable water market and 50% of the wastewater market. In contrast, the largest stake in the water desalinization industry is the 34% held by the privatized IDE Technologies.

Israel Corporation, through its Israel Chemicals unit, has the rights to all of the Dead Sea’s natural resources.

In fossil fuels, energy retailing is split between Paz Oil Company with 25%, Delek Israel Fuel Corporation with 21%, Sonol Israel with 20% and Dor Alon Energy with 18%. The home gas distribution industry is split between Pazgaz with 29%, Amisragas - American-Israeli Gas Corporation, with 22%, Dor Gas with 21% and Supergas with 19%. Natural gas production is dominated by Noble Energy and Delek Energy Systems, which together control 90% of the industry. Natural gas pipelines are an Israel Natural Gas Lines monopoly.

In transportation, Egged controls 45% of the bus industry, while the Dan Bus Company controls 12%.

Olivier Fitoussi