ABSTRACT
We examine how the Mapai-Right Liberal rift shaped Israel’s first Antitrust Law (1959). We document the protracted political debate regarding the proposed law, which lasted from March 1950 until August 1959. While Mapai feared that the private sector would collude against consumer interests, the Right-Liberal parties—the General Zionists and Herut—feared that the Histadrut and agricultural sectors would abuse their economic and political powers at the expense of both consumers and the private sector. Ultimately, Mapai succeeded in advancing its politico-economic interests: The 1959 Law granted broad exemptions to agriculture, government, and the Histadrut—Mapai-connected sectors that together accounted for 60% of GDP. Since then, new political alliances and narrow economic interests have played an important role in preserving the exemption, despite Israel’s transition to a market economy. Some of the exemptions to the 1959 Law have persisted to this day and are a significant cause of Israel’s high level of consumer prices.
