Partial Vertical Integration in Telecommunication and Media Markets in Israel

23 Pages Posted: 20 Dec 2012

See all articles by David Gilo

David Gilo

Tel Aviv University - Buchmann Faculty of Law

Yossi Spiegel

Tel Aviv University, Coller School of Management; Centre for Economic Policy Research (CEPR); ZEW – Leibniz Centre for European Economic Research

Date Written: 2011

Abstract

Partial vertical integration is common in many telecommunication and media markets in Israel. That is, there are many cases in which the supplier of an input holds a partial (often controlling) stake in the input’s customer (which we call the “distributor” for concreteness), or the distributor holds a partial ownership (often controlling) stake in the supplier.2 This is in contrast to full vertical integration, in which the supplier holds 100% of the distributor’s equity, or the distributor holds 100% of the supplier’s equity. For example, since early 2010, when it took over Bezeq, Eurocom Communications Ltd. which imports Nokia cellular phones to Israel has an indirect control over Pelephone, which is the third largest cellular operator in Israel and buys cellular phones from Eurocom for its customers. However, even though Eurocom now indirectly controls Pelephone, its stake in Pelephone is far below 100%. Similarly, Bezeq International Ltd., which is fully owned by Bezeq, currently holds a 67% stake in Walla! Communications Ltd., which operates the Walla internet portal. Walla, Bezeq International and Bezeq, are (partially) vertically integrated because Walla requires internet-access services that Bezeq International supplies, and it also requires access to the infrastructure that Bezeq supplies.

Suggested Citation

Gilo, David and Spiegel, Yossi, Partial Vertical Integration in Telecommunication and Media Markets in Israel (2011). Israel Economic Review, Vol. 9, No. 1, 2011. Available at SSRN: https://ssrn.com/abstract=2191638

David Gilo (Contact Author)

Tel Aviv University - Buchmann Faculty of Law ( email )

Ramat Aviv
Tel Aviv 69978, IL
Israel
+972-3-6406299 (Phone)

Yossi Spiegel

Tel Aviv University, Coller School of Management ( email )

Ramat Aviv, Tel Aviv, 69978
Israel
972-3-640-9063 (Phone)
972-3-640-7739 (Fax)

HOME PAGE: http://www.tau.ac.il/~spiegel

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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