Israel's Privatization Efforts Failed to Boost Competition, Critics Argue
Despite claims by Prime Minister Benjamin Netanyahu, Israel's privatization initiatives and the 2013 Concentration Law have not effectively broken up monopolies or fostered a more competitive economy, according to an analysis. The Concentration Law, enacted in December 2013 under Finance Minister Yair Lapid, aimed to curb the power of private monopolies and reduce market concentration by establishing a committee and empowering the Competition Authority. Crucially, the law did not mandate the privatization of state-owned companies and explicitly excluded the state and government corporations from its definition of "concentrated entities."
Privatizations, such as those of El Al in 2004 and Bezeq in 2005, occurred a decade before the Concentration Law and were unrelated to it. The article highlights that privatization itself does not guarantee competition, citing Bezeq, which remains a monopoly despite being privatized and was fined in 2020 for abusing its market position. Similarly, El Al was recently fined for exploiting its monopoly to raise prices.
Netanyahu often conflates his government's early 2000s privatizations with the later Concentration Law, presenting them as a unified effort to liberalize the economy. However, the article asserts these were distinct initiatives under different administrations and finance ministers. In 2015, two years after the Concentration Law, the Israeli government announced a policy of "no more privatizations" for infrastructure companies, shifting focus to improving their management instead.
Despite this policy shift, some privatizations have continued, including the postal service and parts of the electricity company. The analysis concludes that decades of Netanyahu's leadership, marked by promises of competition to combat high living costs, have not yielded the desired results, with Israelis still facing significant price inflation. Netanyahu himself acknowledged in 2018 that earlier privatizations and budget cuts increased poverty and inequality.
