(Reuters) -
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 have two.
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.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.