NIS 30 million fine on Bezeq: misused it's control over communication infrastructure

by Ifi Reporter Category:Financial Sep 4, 2019

The Competition Authority imposed an unprecedented fine of NIS 30 million on Israel's largest communications group. She rejected Bezeq's claims during the hearing. The competition commissioner announced today to Bezeq that it states that Bezeq, as a monopoly, has misused its control over passive communications infrastructure.
The passive infrastructures in which the Commissioner's decision is concerned are the underground pipes and the communication pits, which are used for the transmission of communication cables. In its two breaches of the law, Bezeq presented barriers to competitors seeking to deploy wired communications networks in its passive infrastructure. Bezeq's practices could have hampered the development of competition in the provision of Internet, television and wired telecommunications services.
This is Bezeq's conduct as part of the wholesale market reform under the previous management and owners of the company. According to the authority, Bezeq hurt its competitors by stacking up difficulties that prevented them from deploying fiber within the company's communications channels. This is access to the company's communications pits that connect buildings and Bezeq prevented its competitors from using these charges.
In addition, Bezeq prevented competing companies from continuously deploying fiber through its communication channels, forcing them to connect fiber in a fragmented manner. Stacking the difficulties hurt Partner's and Cellcom's ability to lay fiber quickly and effectively, thereby hurting competition and the public.
The hearing on this issue has been going on for a long time. The Authority heard Bezeq and claimed that the company had not provided full information about its operations and therefore, in addition to the original fine imposed on it, decided to fine the company with an additional NIS 8 million. In addition, the authority decided to fine the former CEO Stella Handler, during which the events in question took place and was aware of it. The NIS 8 million fine is not granted during the Handler period until after she left.

Earlier this week the Tel Aviv District Attorney's Office (Taxation and Economy) announced on Sunday a series of suspects intends to prosecute them in the Bezeq-yes affair. Among the suspects: Former Bezeq controlling shareholder Shaul Alovich, son of Or Alovich, who served as director of Bezeq, Amikam Shorer, who served as Bezeq's VP of Development, former Bezeq CEO Stella Handler, former Bezeq secretary general Linor Yochelman, former Bezeq communications consultant Eli Kamir and CEO yes Ron Ayalon. The suspects are attributed to the offense of receiving fraudulently, fraudulent and breach of trust in the corporation and violations of the Securities Law.
The first case in which the hearing letter sent to the suspects deals with the way in which the deal for the purchase of yes shares was promoted by Bezeq, while leaking confidential information from the Bezeq board. During 2013, Bezeq examined the acquisition of Alowitz's share (held through Eurocom) in the satellite company yes - so that Bezeq will become 100% of the yes shares.
The move first came through a committee that was set up independently, and staffed by board members. Alovich, his son and Amikam Shorer, were barred from engaging in a transaction on the basis of a conflict of interest and they were to be compiled from any information on the committee discussions. However, according to the suspicion, the secretary of the company, Yochelman, who also served as secretary of the independent committee, leaked to Alovic, in light of Alovic, and to the poet, then considered Alovic's right hand, the details of the discussions. "These actions of Yochelmann were contrary to the statements presented to the Bezeq board, according to which the work of the independent committee will be compiled from the personal stakeholders, and within its obligations," the statement sent by the prosecutor's office said.
The suspects concealed from Bezeq's involvement in the commission's work, saying that Bezeq approved the Bezeq-yes deal on the basis of a false representation that the negotiation procedure was conducted properly and that the stakeholders - who were the other party to the negotiations - were exposed to confidential discussions of the committee and the materials. Confidential presented to her. "
Allovich, Orr Allovich, prevailed and could all be attributed to fraudulent acts of fraud and fraud and breach of trust in the corporation regarding leaks. In addition, violations are attributed to the Securities Law, since they allegedly resulted in Bezeq reporting to the stock exchange a misleading report, according to which the procedure for examining the purchase of shares was carried out without their involvement and without being exposed to information. In March 2015, Bezeq's General Assembly finally approved the agreement that was finally signed to acquire full control of yes. The agreement stipulates that Bezeq will pay NIS 680 million in exchange for shares and an additional NIS 170 million provided that the free cash flow of yes for 2015 to 2017 will meet the targets set in the agreement.
At the time of signing the agreement, Alovic was in a credit crunch on only the debts of the Greenum Group of NIS 800 million to the banks. Alovich allegedly directed Ron Ayalon, CEO of yes, to inflate yes's free cash flow data artificially, to meet conditions. Yes did not pay suppliers on time to improve financial results.
As a result of the implementation of the plan, Alovich fraudulently received advances totaling NIS 118 million, compared to 2015 and 2016.
The delay in payments to suppliers continued on suspicion until 2017, but was interrupted with the outbreak of the Bezeq-yes investigation earlier this year. The suspects are attributed to offenses of fraudulently receiving fraud and breach of trust in a corporation.
The final section of the hearing letters sent to the suspects concerns what later became the 4000 case in which Prime Minister Benjamin Netanyahu is suspected of receiving a bribe from Shaul Alovich, in the form of favorable coverage on the Walla site. In 2015, Shlomo Pilber was appointed Director General of the Ministry of Communications, by the Prime Minister who served as Minister of Communications. Bezeq's regulatory affairs. In it, Filber forwarded to Kmir and Handler, as well as to Allovitz and other Bezeq officials, internal documents from the Ministry of Communications, draft documents before their publication, and other materials. " This, while hiding it from the professionals in the office.

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