JERUSALEM, April 22 Israel's cabinet on Sunday
approved a plan to break up some of the country's largest
conglomerates, aiming to increase competition and bring down
prices after protests over the cost of living last year.
Israel has one of the highest concentrations of corporate
power in the developed world with the government estimating that
the country's 10 largest business groups control 41 percent of
the market value of public companies.
"The government's decision today is another step in lowering
the cost of living," Prime Minister Benjamin Netanyahu said in a
statement. He told the cabinet that getting rid of cartels and
monopolies would increase competition.
Conglomerates will have to choose between owning major
financial or non-financial companies. Holding companies
structured like pyramids will have to limit how many tiers of
subsidiaries they have.
Existing groups, which currently hold listed subsidiaries
that in turn have their own subsidiaries, will be allowed no
more than three tiers of subsidiaries. New conglomerates can
Companies will have four years to comply.
Protesters say Israel's conglomerates are partly to blame
for driving up prices of basic goods. Protests are expected to
resume in coming weeks.
According to the recommendations, companies cannot hold a
financial firm with assets above 40 billion shekels ($11
billion) at the same time as a non-financial company of more
than 6 billion shekels of revenue.
As a result, the IDB Group would have to divest
Clal Insurance or other key holdings such as Cellcom
, Israel's largest mobile phone operator.
Delek Group would have to decide between keeping
insurance company Phoenix and brokerage Excellence
Nessuah or its fuel business -- which includes a number of
offshore natural gas fields.
Private equity firm Apax Partners would need to
choose between food maker Tnuva or the Psagot brokerage.
($1 = 3.75 shekels)
(Reporting by Steven Scheer; Editing by Matthew Tostevin)