24th of Tevet 5779
1st of January 2018
IDAN OFER IS SELLING ALL HIS HOLDINGS IN RESHET AND UNDERTAKES NOT TO OPERATE IN THE COMMUNICATIONS FIELD IN ISRAEL FOR 25 YEARS AS A CONDITION TO OBTAINING ELECTRICITY GENERATION LICENSES
The Concentration Committee has arrived at an agreed roadmap with the Ofer Group for reducing the economy-wide concentration of the Group. According to the roadmap, the Group will exit the communications field and will not operate therein also in the future. After selling all the Group's holdings in the communications field, the Group will be allowed to obtain electricity generation licenses.
On August 7, 2017, the Concentration Committee recommended to the Electricity Authority not to allocate to Zomet Energy Ltd., which is controlled by Idan Ofer, a conditional electricity generation license based on considerations of economy-wide concentration. The Electricity Authority accepted the Concentration Committee's recommendation and did not allow the Group to obtain the requested license. Consequently, the Idan Ofer Group held extended talks with the Committee at the end of which they arrived at the roadmap.
Under the roadmap, Idan Ofer undertook to sell all his rights in Reshet Media Ltd. to a body that is not a concentrated entity and that is not related to him – as well as not to Ehud Angel with whom he has business relations – and undertook not to maintain any holding in the communications field during the next 25 years. Pursuant to the Group's disengagement from the communications field and after this disengagement is completed, the Concentration Committee's position is that economy-wide concentration grounds will not prevent the Group from development in the electricity generation field, up to a limit to be prescribed in the sectoral competition stance of the Antitrust Authority.
The Group's undertaking includes its departure and disengagement from all activity in the communications field and a commitment not to operate in the field in the future and including that it will not hold any influential entity in the field of broadcasting or print media, media buying companies and websites (or other electronic media) that are engaged in the fields of news or current events. The undertaking also restricts the Group with regard to holdings of foreign media outlets. This undertaking, which the Committee required, is intended to neutralize any media influence of the Idan Ofer Group.
According to the roadmap, only after the Group sells all its rights in Reshet under a Fix It First mechanism, the Committee will not advise against allocations to the Group in the electricity generation field during the next 8 years, so long as the total installed capacity held by the Group does not reach the limit that is to be prescribed in the Antitrust Authority's stance with regard to the sectoral competition.
The Committee explained its consent to the roadmap in that the positive impact of the Group's departure from the communications field, on concentration, is immeasurably greater than the increase in concentration resulting from the expansion allowed to the Group w in the electricity field:
"Reshet is one of the largest and most influential communication bodies in the economy – the Reshet 13 channel is one of the two leading channels in Israel and the news broadcasts that it transmits are the most viewed. The communications field is an exceptional sector in the degree of potential influence that it has in creating bargaining power vis-א-vis the policymakers and in easing the exercise of bargaining power by use of media reporting. This influence is intensified when the holding of such a key media outlet is involved.
Moreover, the holding of media outlets has a lateral impact that increases the bargaining power that concentrated entities might exercise through holdings in essential infrastructure fields and in general, and it is intensified insofar as the entity is more concentrated, let alone when exercised by the most concentrated group in the economy. Therefore, the sale of Reshet would greatly reduce the bargaining power and the influence of the Group and the level of its economy-wide concentration. The economy-wide benefit that this reduction has is immeasurably greater than the harm to the economy-wide concentration that might be caused by the Group's expansion in the electricity field – a restricted expansion, as stated."
The Committee further added that the Ofer Group's departure from Reshet and from the communications field is a complete departure from a field in which the Group has significant activity and in which it serves as a very dominant player, while the Group's expansion in the electricity field is not an entry into a new field, but only an expansion in a field in which it has already been operating for years.
The Concentration Committee has been operating since the entry into force of the law as of the end of December 2014 and it is headed by Michal Halperin, the Director General of the Israel Antitrust Authority. The members of the Committee, include Prof. Avi Simhon, Chairman of the National Economic Council and Mr. Shai Babad, Director General of the Ministry of Finance.