Netanyahu: Dismantle Oligarchies, Encourage Competition

This week, Prime Minister Benjamin Netanyahu announced that he would be taking steps to encourage competition and force the cost of living in Israel down including breaking up the monopolies.

The announcement was made Monday morning together with Finance Minister Yuval Steinitz and Bank of Israel Governor Stanley Fischer at a press conference regarding the current state of the economy.  In the announcement, Netanyahu said that he had ordered a report about the cost of living in Israel a year ago when he realized the prices of basic amenities and homes were rising faster than anticipated.  The Prime Minister also ordered an analysis of the practices of the monopolies and ways to encourage competition in the uncompetitive sectors, such as the telecommunication and banking industries.  Netanyahu closed his remarks by saying that while he wants to encourage competition; he also wants to keep businesses intact.

Finance Minister Steinitz echoed Netanyahu’s sentiments, saying that the committee has been dealing with a very delicate issue and said he would be implementing the committee’s recommendations, all of which would benefit the country as a whole, from consumers to businesses.  Those same though were echoed by Fischer, who praised the committee for their work.

The report’s contents are currently under review, but it defines a financial corporation as having NIS 50 Billion in assets and a non-financial corporation as having NIS 8 Billion in sales per year with a balance sheet of around 20 Billion.  If implemented, shareholders would be unable to hold shares in both companies and would also prevent the board of one company from serving as part of a second company.

In addition, the report made several recommendations including the breakup of pyramid companies, not allowing banks to be owned by a non-financial company and most importantly finally giving  the Anti-Trust Authority the ability to exercise its muscle and break up monopolies.  The report also went so far as to identify the corporations that would need to be broken up for violation monopolistic practices as well as those companies that have to choose between executives.

However, the reactions of major companies and conglomerates such as Bezeq and Cellcom were negative, with significant drops occurring in the value of each company’s stock on the TASE.