Sheinin: Regulation is answer to concentration

“You mustn’t throw out the baby with the bathwater.”

“The US is the exception in this case, not the norm. Only there is there separation between financial and non-financial holdings. In small countries like us, you mustn’t throw out the baby with the bathwater,” says Dr. Yacov Sheinin, a member of the advisory forum to Minister of Finance Yuval Steinitz on concentration in the economy.
Sheinin added, “Before breaking things up and forcing people to sell, you have to fix corporate governance, and use regulation and legislation. If that doesn’t work, then it’s possible to review other options, but I think that that will suffice.”

As “Globes” first reported yesterday, Prime Minister Benjamin Netanyahu announced that Prime Minister’s Office director general Eyal Gabai and Ministry of Finance director general Haim Shani will head the inter-ministerial committee on concentration of ownership in the economy.

Sheinin said that there were many strong regulators in Israel. “Look what happened to the cellular market with connectivity. The regulator decided to slash connectivity fees from NIS 0.25 to NIS 0.05, and succeeded. You’ll agree with me that the cellular companies are the strongest in the economy. Nonetheless, they failed and the regulator won. This is a classic example of a sweeping success against very strong companies. So we can take it that we have strong regulators.”

Published by Globes [online], Israel business news – www.globes-online.com – on October 14, 2010