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Partial Vertical Integration in Telecommunication and Media Markets in Israel

Author

Listed:
  • David Gilo

    (Tel Aviv University)

  • Yossi Spiegel

    (Tel Aviv University)

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

  • David Gilo & Yossi Spiegel, 2011. "Partial Vertical Integration in Telecommunication and Media Markets in Israel," Israel Economic Review, Bank of Israel, vol. 9(1), pages 29-51.
    • Handle: RePEc:boi:isrerv:v:9:y:2011:i:1:p:29-51
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    Citations

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    Cited by:

    1. Spiegel, Yossi, 2013. "Backward integration, forward integration, and vertical foreclosure," CEPR Discussion Papers 9617, C.E.P.R. Discussion Papers.
    2. Fiocco, Raffaele, 2016. "The strategic value of partial vertical integration," European Economic Review, Elsevier, vol. 89(C), pages 284-302.
    3. Sánchez, M. & Nerja, A., 2024. "The role of asymmetric innovation’s sizes in technology licensing under partial vertical integration," Research in Economics, Elsevier, vol. 78(2).
    4. Mariola Sánchez & José Antonio Belso‐Martínez & María José López‐Sánchez & Adrián Nerja, 2022. "Incentives to exclusive and non‐exclusive technology licensing under partial vertical integration," Manchester School, University of Manchester, vol. 90(2), pages 171-189, March.
    5. Nicolas Pasquier, 2024. "Decentralization and Consumer Welfare with Substitutes or Complements," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 64(3), pages 449-469, May.
    6. Zevgolis Nikolaos E. & Fotis Panagiotis N., 2019. "A Rule of Reason Approach for Passive Minority Interests within the European Union," Review of Law & Economics, De Gruyter, vol. 15(3), pages 1-41, November.
    7. Papadopoulos, Konstantinos G. & Skartados, Panagiotis, 2021. "The ambiguous competitive effects of passive partial forward integration," UC3M Working papers. Economics 33354, Universidad Carlos III de Madrid. Departamento de Economía.
    8. Konstantinos G. Papadopoulos & Emmanuel Petrakis & Panagiotis Skartados, 2022. "The ambiguous competitive effects of passive partial forward ownership," Southern Economic Journal, John Wiley & Sons, vol. 89(2), pages 540-568, October.
    9. Li, Jin & Yang, Shilei & Shi, Victor & Zhai, Senjing, 2020. "Partial vertical centralization in competing supply chains," International Journal of Production Economics, Elsevier, vol. 224(C).
    10. Ryo Masuyama, 2022. "Partial forward ownership and upstream quality investment," Economics Bulletin, AccessEcon, vol. 42(4), pages 1811-1816.

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