Tova Cohen: Cottage cheese boycott concentrates minds on business

It TOOK a two week-long cottage cheese rebellion to get Israelis to question the power of the country's tycoons.

Angry about high prices, consumers boycotted the beloved dairy product last month. As containers of cheese piled up on supermarket shelves, the country's richest people became the focus of the sort of media attention normally given to politics and security issues.

Newspapers and television stations, which civic groups have long criticised for ignoring the massive concentration of corporate power in a small group of Israeli business groups and families, made the boycott a top story for days. "I woke up this morning smeared in cottage cheese," Muzi Wertheim, a business magnate who controls one of the country's largest dairy producers, said during a speech at a Tel Aviv university at the peak of the protest.

Cottage cheese might be just the beginning. Last October the Israeli government set up a committee to explore the level of competition in the economy. The committee is expected to present its findings in several weeks. The Bank of Israel has already said the country has one of the highest concentrations of corporate power in the developed world. A scathing parliamentary report from June last year found that ten large business groups controlled 30 per cent of the market value of public companies, while 16 control half the money in the entire country.

That's far more than in western economies such as the UK, Spain or Germany.

The Organisation for Economic Co-operation and Development, which last year admitted Israel as a member, said Israel's level of corporate concentration was problematic.

If the government committee agrees with those assessments it could recommend breaking up the biggest oligopolies and opening Israel's market to new competition and investment, both foreign and local. Though nothing has been decided, change looks increasingly likely.

Such a move would have huge implications for tycoons such as Mr Wertheim, whose dairy business is just one part of an empire that includes the country's fourth-largest bank, a Coca-Cola bottling company and a primary share in one of its largest property firms. Like many of Israel's other magnates Mr Wertheim also owns a large stake in a popular media organisation.

Concentration in Hebrew is often called "hon v'shilton", which means "fortune and governance", but refers more to the close relationship between the two.

"We see the 'fortune' walking through the halls of parliament," parliamentary speaker Reuben Rivlin said in a radio interview last month."'Fortune' is more and more taking control of the judgment of the people sent by the public to safeguard the state of Israel and its interests."

One of the problems, according to the OECD, is that Israel's big business houses exert control through "cascading ownerships, pyramidal structures and cross-holdings".

In a pyramid structure, a holding company controls a subsidiary, which then controls its own subsidiaries, and so on until the top of the pyramid can technically control a company at the bottom with less than 10 per cent of the capital.