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According to the Centralization Law, the declaration of a business group as a centralizing entity means that if it wants to obtain from the state a right (licenses or concessions) in vital infrastructure, the relevant regulator for the allocation of the right is obliged to consult the Centralization Reduction Committee. The referral should be made as early as possible. That is, already in the early stages of the tender, for example the purchase of the tender booklet. The committee’s recommendation, by law, is not binding, but to this day government ministries have always been in line.
An example of a recently allocated right allocation regarding centralized bodies concerns the privatization of the Port of Haifa. In January, following a request from the Companies Authority, the committee announced that after examining their participation in the Center of Transport Holdings, Leumi Partner, Allied Holdings and Clal Industries, it recommends not to prevent their participation in the procedure for reasons of cross-sectoral concentration.
Biennial update
The list of bodies, as previously decided, is updated once every two years. By law, the committee believes in reviewing and updating the list even in light of business developments. At the same time, it sends data requirements to dozens of companies to decide whether to keep it or remove it from the list.
The indices for declaring a body as a centralizing factor derive from its transformation into a significant real body (annual sales turnover of NIS 5.98 billion, or NIS 1.99 billion in the case ofmonopoly), Or significant financial (assets worth NIS 39.6 billion). Another meaning of declaring a body as a significant real corporation is that it cannot simultaneously hold a significant financial body.
The list of significant non-financial corporations includes 24 groups in which at least one of the following conditions exists: their determining sales turnover exceeds NIS 5.98 billion or NIS 1.99 billion in monopoly markets; Their determining credit exceeds NIS 5.98 billion.
The list of significant financial entities includes 19 groups: 5 banks and 11 institutional entities, whose total assets exceed NIS 39.6 billion; And 3 clearers (one of which is owned by a bank) with a wide scope of activity, that is, they are responsible for at least 20% of the total debit card transactions cleared in Israel.
The numbers behind the update
For example, the Rami Levy group Entered the list of significant non-financial corporations due to its regular sales turnover which in 2019 exceeded NIS 5.98 billion. The controlling shareholder in the group, Rami Levy, was also included in the list of centralizing factors in light of his private business.
The Moti Ben Moshe Group (Israel Blue Square Oak) entered the list of significant non-financial corporations due to its regular sales turnover and its permanent credit, which in 2019 exceeded NIS 5.98 billion. The controlling owner of the group, Moti Ben Moshe, was also included in the list of centralizing factors.
Shafir Group Entered the list of centralized entities due to the holding of over 10 rights in four vital infrastructure areas. Areas in which the group operates include: oil and natural gas exploration, oil shale, gravel quarrying, limestone, dolomite and aggregate, natural gas distribution, local railways and roads. The controlling shareholders in the group – Harel, Israel, Gil and Chen Shapira, were also included in the list of centralizing factors.
Shufersal Group, Which was previously controlled by DSK and included in the Eduardo Elstein Group, became an independent, uncontrolled group, and entered the list of significant non-profit corporations due to Shufersal’s regular sales turnover, which in 2019 exceeded NIS 5.98 billion.
Isracard Group Entered the list of significant financial entities because it was eliminated with a wide range of activities. In the past, Isracard was part of the Bank Hapoalim group, today it has no control.