Israel passes law to break up big conglomerates
JERUSALEM Dec 9 (Reuters) - The Israeli parliament passed legislation on Monday aimed at improving economic competition by halting pyramid structures in companies and breaking up large conglomerates blamed for high living costs.
The move will, over the next several years, reduce the amount of concentration of corporate power in Israel, one of the highest in the developed world. The government estimates that the country's 10 largest business groups control 41 percent of the market value of public companies.
The legislation won initial approval more than a year ago but has been delayed by a general election and months of work to approve a state budget. It passed on Monday unopposed.
Corporate concentration rose to the top of the political agenda in 2011 when hundreds of thousands of protesters took to the streets demanding lower prices for housing, consumer services and many basic goods.
"Today we radically changed the future economic structure and adapted it to the needs and real interests of the public," said Nissan Slomiansky, head of parliament's finance committee.
Most market sectors will be opened up to new competition and big business groups will see their influence on policy makers reduced, Slomiansky said.
Key measures in the law include limits on the number of layers permitted in a pyramid-type holding company in the next four to six years, and a ban on formation of new pyramids.
Companies will also be barred from holding financial units - like a bank or an insurance company - with assets exceeding 40 billion Israeli shekels ($11.2 billion) at the same time as non-financial units - like a mobile phone operator - with more than six billion shekels of revenue.
For example, one of Israel's largest holding companies, Delek Group, will have to choose between keeping Phoenix Holdings, which owns an insurance firm and an investment house, and its energy unit, through which it has a significant stake in a number of offshore natural gas fields.
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