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At the beginning of 2014, the Israeli Parliament (Knesset) enacted the Law for the promotion of Competition and the Reduction of Centralization (portion of whose provisions have already entered into effect while others will enter into effect gradually, until 2016).  The law is based on the recommendations of the Committee for the Promotion of Competition in the Israeli Market which was appointed by the Israeli Government for the purpose of examining means for dealing with the structural problems that exist in the Israeli market and which is characterized by super-affiliated unfettered centralization when compared to other markets throughout the world

By reliance on this law, the legislator seeks to increase competition in the Israeli market, to ensure a competitive and efficient market, to defend the investor public and to strengthen the solidity of financial middlemen and their stability.  In order to attain the legislator’s objectives, the law deals with three different levels of centralization: (a) general economic centralization at the time of allocation of rights in the fields of essential infrastructure and considerations of competition at the time of allocation of significant rights – thus the law requires the regulator entrusted with the allocation of rights, to consider, prior to the allocation of rights, centralization considerations, to the extent economic, through consultation with the Committee in order to reduce the centralizations; (b) ”dissolution” of companies having a pyramidal control structure by restricting the structural holdings to three tiers, at most, where the central means of enforcement will be the appointment of a trustee on behalf of the court which will bestow on him means of control that are held contrary to the provisions of the law and whose principal purpose will be to sell such means of control; and (c) a separation between “real” (i.e., non-financial) significant corporations and significant financial bodies by restricting the joint ownership, which finds expression by separating the body holding the significant financial body and the body holding the significant “real” corporation, by restricting the number of significant financial bodies as well as by regulating the appointment and termination of the office of directors in significant financial bodies.


Amit Steinman is a partner at the Israel based law firm S. Horowitz & Co. He advises on the full range of corporate and commercial transactions with a particular focus on mergers and acquisitions, joint ventures, equity investments, capital markets and acquisition financing. His clients include multinational corporations, financial institutions, private equity funds and start-up companies, spanning a wide range of sectors including technology, energy, infrastructure, telecoms, homeland security, financial services, media and clean-tech.

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