Concentration Law
The Concentration Law is Israel's 2013 Law for the Promotion of Competition and Reduction of Concentration. It caps corporate pyramids at two layers and separates large financial and non-financial groups.
The Concentration Law is Israel's 2013 Law for the Promotion of Competition and Reduction of Concentration, which limits how much of the economy a few business groups can control. It does three things: it requires the state to weigh concentration when it awards public rights, it caps corporate pyramids at two layers of public companies, and it separates large financial institutions from large non-financial corporations. The Knesset passed it in December 2013.
Last updated: October 31, 2026
What Is the Concentration Law?
The Concentration Law is the common name for the Law for the Promotion of Competition and Reduction of Concentration, 5774-2013. The Knesset gave it final approval on December 9, 2013, and it was published in the days after. It implemented the recommendations of the Government Committee to Encourage Competitiveness in the Economy, and it was aimed at conglomerates blamed for high living costs, according to Reuters and Globes reporting at the time.
What Are the Three Parts of the Concentration Law?
The law has three main parts, each aimed at a different form of concentration.
| Part | What it requires |
|---|---|
| State rights | Economy-wide concentration and industry competitiveness must be considered when the state awards rights such as concessions and licenses |
| Pyramid structures | A business pyramid is limited to two levels of public (reporting) companies, and new pyramids may not exceed two layers |
| Financial and non-financial separation | A significant non-financial corporation may not control a significant financial institution, with deadlines set four to six years after the law was published |
What Counts as a Significant Corporation Under the Law?
A significant non-financial corporation is defined by size, using annual turnover or credit above a threshold. According to a Knesset Research and Information Center review, the threshold for significant non-financial corporations was annual turnover or credit above NIS 6 billion, and in 2019 Israel had 21 such groups and 18 groups defined as significant financial entities. The law also gives the finance minister and the Bank of Israel governor authority to issue directives limiting credit to concentrated groups. The Bank of Israel entry covers the central bank's wider role.
Why Does the Concentration Law Matter to Investors?
The Concentration Law forced large Israeli groups to restructure and sell assets, which created acquisition opportunities. Conglomerates were given until December 2019 to complete the main disposals, according to law firm analysis published by Latham & Watkins, and legal advisers described the deadlines as a catalyst for M&A activity and private equity deals. The Knesset review found that implementing the law reduced aggregate concentration in the areas it covers.
Frequently Asked Questions
When was the Concentration Law passed?
The Knesset passed the Concentration Law in December 2013. Its formal name is the Law for the Promotion of Competition and Reduction of Concentration, 5774-2013.
How many layers of public companies can a pyramid have under the Concentration Law?
A business pyramid is limited to two layers of public companies, and new pyramids cannot have more than two layers.
Can a large industrial company own a large bank or insurer in Israel?
No. The law separates significant non-financial corporations from significant financial institutions, so one controlling group cannot control both.
Why is it called the Concentration Law?
The name comes from its goal of reducing economic concentration, meaning the control of a large share of the economy by a small number of business groups.