Knesset passes Concentration Law

Finance Committee chairman MK Nissan Slomiansky: The new law will fundamentally change economic life in Israel and greatly help ordinary people.

On Monday night, the Knesset plenum gave second and third readings to the Business Concentration Law submitted by the government to promote competition and reduce concentration in the economy. The Knesset Finance Committee, chaired by MK Nissan Slomiansky (Habayit Hayehudi), saw the bill through the committee stage.

The law tackles three main issues to foster competition and reduce concentration in the economy. Chapter 2 of the law contains provisions for calculating economy-wide concentration and industry-wide competitiveness when the state awards rights. Chapter 3 contains provisions limiting control in companies through pyramid structures. The most important of these provisions is the limiting of a business pyramid to two levels of companies. The law's provisions also set out the finance minister and Bank of Israel governor's authority for issuing directives limiting credit.

Chapter 4 of the law contains for separating major financial institutions and non-financial corporations. A list of these corporations and financial institutions will be drawn up by the committee for reducing concentration, which will be headed by the Antitrust Authority director general. The law also states that a major non-financial corporation may not control a major financial institution, after four to six years from the publication of the law.

The Finance Committee unanimously approved the Business Concentration Law for its second and third Knesset plenum readings, after many months of discussions. The committee decided to ban the establishment of new business pyramids, and that old pyramids will be dismantled within 4-6 years, in order to allow the organized and proper sale of assets and large companies without undermining stability of the economy.

Under the law, most directors of public companies will be independent directors. The law allows an exception in special cases, approved by the minister of justice and the Knesset Finance Committee, in which 50% of directors will be external directors, but external directors may never be less than one third of the board.

Slomiansky presented the law to the Knesset plenum. "The new law will fundamentally change economic life in Israel and greatly help ordinary people, who will be able to benefit from their money instead of others benefiting from it. This law should be passed unanimously, because it is divorced from politics. The current situation is utterly immoral. Our country is small, but business concentration is very high. Breaking up concentration will allow competition, which will lower prices. This is a powerful law that will improve the Israeli economy," he said

After the vote, Minister of Finance Yair Lapid said, "We have brought about the dispersal of economic power in the country." He thanked everyone involved in the legislative process, saying, "This is a great day for Israel."

Published by Globes [online], Israel business news - www.globes-online.com - on December 10, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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