Trust-Busting Or No Trust-Busting, That Is The Question

A few months ago, a bill was submitted to the Knesset that would potentially weaken the hold of monopolies on different sectors of the economy.  The bill is up for debate and experts are divided as to the results.

The original law grants the antitrust commissioner the authority to declare sectors with few competing companies and take action to encourage competition, including forcing companies to dissolve or split into different companies.  In addition, the commissioner would be able to overrule any sector-specific regulators that dispute the Antitrust Authority’s ruling.

However, the bill raised the hackles of sector regulators and as well as CEO’s of major companies.  Together with the banking and insurance commissioners, they deluged the Economic Affairs Committee with criticism and relentless lobbying.  As a result, the law was weakened and now grants other regulators permanent veto powers over the antitrust commissioner, allowing them to end any action against a given sector of the economy.

Supporters of the bill insist that the bill, even if weakened, will still allow the Antitrust Authority, for the first time, to promote competition in monopolized sectors such as banking, insurance, communications and energy.  They also claim that antitrust commissions will abuse their authority and cause chaos in sectors dubbed monopolized and the veto will ensure stability.

However, opponents counter that the bill is now too weak.  Former commissioner Dror Strum argues that the proposal is a bad idea, especially since it would give veto power to the very people responsible for the lack of competition in the Israeli economy.  According to him, the bill needs to be rewritten and passed in a new format that will give the law teeth and not just give the Antitrust Authority the ability to issue recommendations which are likely to be ignored.

The bill is also a contentious subject since the head of the Antitrust Authority changed a few months ago and the most profitable sectors of the economy are nervous that the new commissioner will take action against monopolized industries.