IDB Says: Israeli Economy Is Competitive

IDB group is not arguing that Israel doesn't have economic concentration, it is arguing that the concentration that exists is not harmful.

The hearings that the government-appointed economic concentration committee holds for the big business interests should be open to the general public, demands Zahava Gal-On, member of the Knesset Finance Committee. At least one group may be open to that, going by its opinion stated yesterday that Israel's economic concentration is not a problem: The IDB group filed its position paper with the committee yesterday, writing, "There is no question that the Israeli economy is highly competitive."

The group is not arguing that Israel doesn't have economic concentration. It is arguing that the concentration that exists is not harmful. IDB quotes former Supreme Court president Aharon Barak, who once ruled that an economy as small as Israel's warrants and enables a relatively high level of economic concentration, to improve the ability of Israeli companies to compete in the international markets.

IDB, which is controlled by Nochi Dankner together with the Livnat and Manor families, bases its conclusion on the World Economic Forum's index tracking competitiveness: it advanced Israel from 27th place to 24th, among 139 nations in its 2010-2011 report.

IDB, one of the biggest pyramidal holdings groups in Israel, relies on a remark by OECD secretary-general Angel Gurria dating from May: He stated that he would send a team of experts to Israel to learn how to cultivate and encourage competition.

The IDB group goes on to say that competition is a cornerstone of a healthy economy, and a key test of a nation's resilience and international standing. Owning holdings in multiple areas does not impair competition, the group writes in its position paper: "There is no theoretical economic basis or empirical basis correlating economic concentration to harm to the consumer," it adds.

The group adds that conglomerates - which it is - are an accepted structure in the global business scene.

During the last year, the McKinsey & Co. group studied the state of competition in Israel, on behalf of IDB, from an international basis. It found no connection between the level of economic concentration and the level of competition, IDB says, based on that report. "Economic concentration in Israel is average in comparison to the rest of the world, and is steadily decreasing."

The consultancy also advised that nowhere in the world is economic concentration being tackled through legislation, IDB wrote.

The IDB group's holdings span most sectors and dozens of companies. It has holdings in finance, through controlling interests in Clal Insurance and Excellence; in the media, having just bought the Maariv publishing company; in telecommunications (Cellcom, NetVision ) and industry (a host of companies ); and retail (Super-Sol ) and construction (Property & Building ); it owns the Nesher cement monopoly, and much more.

IDB has come under attack for owning both finance companies and the companies that borrow from finance companies. In its opinion paper, however, IDB points out that the United States allows conglomerates to have both finance and non-finance holdings.

Zahava Gal-On meanwhile urged that rhe economic concentration committee handle the hearings phase with open doors, to assure the public that its interests aren't being trampled by the representatives of the tycoons, she said yesterday.