The committee's work has taken a dramatic turn and accelerated considerably following the wave of social justice protests that swept Israel during the summer of 2011.
The issue of the concentration of economic power in few hands and its effect on competitiveness, prices, productivity, innovation and politics and lawmaking was campaigned for since 2008 by TheMarker, a leading Israeli business publication.
An October 15, 2015 article in Financial Times stated that: “…it is the role that the business newspaper TheMarker has played in Israel in exposing the effect on the national economy of the concentration of power and wealth in the hands of a few billionaires”.
[3] In a March 23, 2015 article titled “ How To Fix American Journalism” in The Nation, Michael Massing wrote: “… TheMarker, an Israeli financial newspaper distributed as a supplement to Haaretz, waged an unflagging campaign beginning in the mid-2000s against the extraordinary concentration of economic power in Israel and the dangers that this development posed to Israeli society and democracy.
It was a remarkable display of how one news organization, through tenacious and unflinching reporting over a period of years, can help spur systemic change.”[4] Also, in a December 11, 2013, HaAyin HaShevi'it, an independent watchdog that focuses on the Israeli press, wrote that “For better or for worse, those who made concentration a major discussion topic are TheMarker, led by Rolnik.
This is definitely an exceptional example, not only in Israel, of a media outlet that successfully employs an aggressive, but also creative and diverse, campaign to significantly influence the public discourse to the point of pushing for a law that is expected to lead to major changes in the economy’s structure.”[5] In April 2008, Bank of Israel published a paper by research economist Konstantin Kosenko, “Evolution of Business Groups in Israel: Their Impact at the Level of the Firm and the Economy”, in which Kosenko wrote: “Using panel data on 650 public companies from 1995 to 2006, we identify twenty major business groups controlling about 160 listed companies and close to a half of total stock market capitalization, while the 10 largest groups' segment of the market capitalization is among the largest in the western world and amounts to 30 percent.
Business groups are dominant especially in the financial sector, where half of banks and insurance companies are group-affiliated.”[6] A December, 2011 economic survey of Israel by the OECD mentioned this paper.
Israel’s business groups are typified by broad sectoral dispersion, a significant tendency to focus on the financial sector, strong maturity of affiliated firms in terms of both age and size, slow growth, and higher levels of financial leverage—and therefore also of risk—among affiliated than among stand-alone companies.”[8] The report also stated that: “On the basis of the totality of findings about their activities, one may include Israel’s business groups among the entities that have the latent potential of systemic risk.
This is because their activity satisfies two main criteria in the test of systemic risk: both their economic size and their complexity—in terms of concentration of control, ownership structure, and sectoral interrelations with financial and real institutions—create the probability of a spillover effect in the event of their failure, make it difficult to analyze information about their activity, and, in turn, make it hard to assess the risks of this activity and its relation with overall system stability.” In its interim report, released on October 11, 2011, the committee concludes that the Israeli economy is concentrated, both in the real and financial sectors; that a few holding groups, that have a pyramidal holding structure, control disproportionally large portions of the Israeli economy; that these groups are typically active both in real and financial sectors; and that this structure creates a situation where they are competitors, suppliers and customers of each other.
During 2017, TheMarker campaigned for the creation of a parliamentary inquiry committee to investigate the loans that the banks extended to top Israeli business people.
The inquiry committee itself offered an explanation as to how the cooperation between the banking system and concentrated businesses comes at the expense of consumers and dispersed public.
Its economic advisers claim that the financial system provides superior credit terms to large, multi-layered, borrowers who use the resources to generate income by extracting rents rather than by activities that create wide benefit.
TheMarker repeatedly pushed for the implementation of the recommendations of a 1985 inquiry committee (the “Bejski Commission”): to force banks to sell their asset management operations so as not to put them in a conflict of interests with their role as investment advisors.
In March 2011, five months after Netanyahu created the concentration committee, Nochi Dankner's IDB bought Maariv, a daily newspaper.
Lately, it was TheMarker that drew the light to a debt settlement in the works between one of the companies in Dankner’s holding pyramid and Bank Leumi.
[27] Additionally, in April 2010 Dankner was arrested on suspicion of, among other things, bribery, money laundering and tax evasion regarding a big real estate project in Jerusalem, the Holyland Case.
First, at the firm level, these ownership structures vest dominant control rights with families who often have little real capital invested – creating agency and entrenchment problem simultaneously.
At the economy level, extensive control of corporate assets by a few families distorts capital allocation and reduces the rate of innovation.
In a June 2010 special edition, TheMarker and Rolnik called on Israeli politicians, regulators and civil society to adopt a “Brandeisian” approach to antitrust and economic policy.
[33] U.S. Supreme Court Justice Louis Brandeis is well known for his approach to antitrust that focuses on the importance of fighting “bigness” - the concentration of economic and political power in the hands of the few in the beginning of 20th century U.S. TheMarker's special edition was dedicated to the role of Justice Brandeis in fighting the American oligarchy in the U.S and in its opening column Rolnik called for a Brandiesian movement in Israel to curtail the increasing power of the Israeli oligarchy.
"In taking on power-hungry tycoons 100 years ago” Rolnik wrote, “Louis Brandeis became the social conscience of the most capitalist country in the world.
In January 2015 Rolnik presented the findings in the keynote address of Israel's Antitrust Authority annual event with his co-author, Dr. Roy Shapira from Harvard Law School.
Among all major Israeli newspapers, TheMarker was the only one that put concentration on the agenda, primed it and framed it as harmful to the economy and as an issue that is not partisan.
Fishman was also the second-biggest investor in Yedioth Ahronoth, which is controlled by Arnon (Noni) Mozes and was for four decades the most popular and powerful newspaper in Israel.
In February 2010, HaAyin HaShevi'it wrote that when an economics commentator of one newspaper mocks the idea of concentration, “it is clear to all who he is pointing his arrows at: TheMarker”.
[42] In its paper, IDB cited OECD Secretary General José Ángel Gurría, who said in 2010 that in the last generation, Israel's competitiveness has improved “beyond recognition”; and the former Chief Justice of Israel's Supreme Court, Aharon Barak, who wrote in 1998 that “the relative small size of the Israeli economy justifies – and makes possible – a high concentration relative to other countries”.
The demonstrators, who adopted the slogan “The people demands social justice”, protested the high cost of living, especially housing and food, against inequality, against the banking system and against concentration.
Seeing the protests as a threat to his government, Netanyahu formed, in August 2011, the “Committee for Economic and Social change”, which was tasked with examining and proposing solutions to Israel's socio-economic problems.
Eventually, in 2010, the reform was enacted, resulting in significantly reduced consumer bills and, according to a Ministry of Finance paper, in 17.5 million shekels (approximately 4.6 billion dollars) of total economy savings up to 2014.
On March 3, 2016, and with no objections, Israel's Knesset approved a bill that capped the maximum yearly pay in financial intuitions recognized for tax purposes at 2.5 million shekels (approximately 650 thousand dollars).