Recently, all kind of documents written by private bodies as well as government institutions were passed on to decision makers, who decided yesterday to set up a committee to increase competition.
Here are eight facts on concentration in the economy, based on those documents:
1. Concentration means pyramids of control. At the top of the pyramids are the biggest holding companies in the economy. The pyramids allow several individuals to manage and control hundreds of billions of shekels, with an investment of only NIS 1-2 billion. It is something like getting a mortgage for 99% of an apartment. The type of control at the business groups is family-like.
2. The total financial assets of the public are about NIS 2.4 trillion. Of that, NIS 1.8 trillion is available is available to the private sector (the remainder is used by the government to service debt). Of the private sector funds, holding groups control the majority.
3. Concentration brings power and control of capital and national savings. Most of the public's financial assets are controlled by a small group of people.
4. About 20 business groups, most of them family-controlled, which means less than 100 decision makers, with a pyramid structure, controlled and control about 25-30% of public companies, and around 50% of the TASE's market cap.
5.There is a tight network of reciprocal ties between the banking sector and the business groups - reciprocal ties between groups can be seen in combined ownership of companies and joint participation on boards of companies.
6. A Midroog Ltd. report shows 16 groups own 56% of corporate debt issued, 7 groups own 45% of it.
7. A Knesset information center report shows that 6 groups get 27% of the non-bank credit in the economy. The business groups control 50% of the banking and insurance sectors.
8. Israel Securities Authority research into executive pay shows that executive pay at companies which belong to a business group is higher than that of executives at companies which do not belong to a business group (one which includes at least 3 different operations.
Published by Globes [online], Israel business news - www.globes-online.com - on October 14, 2010
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