Based on Article 19 of the Competition Act No. 44/2005 The Competition Authority has extensive powers to require companies and other parties covered by the law to provide information that is deemed necessary for the investigation of individual cases, including the production of documents for inspection. The Competition Authority can, among other things, require information and data from other government authorities, regardless of their duty of confidentiality, including tax and customs authorities.
The Competition Authority also has a specific legal power under Article 20. clause of the Competition Act to carry out searches and seize documents at the premises of an undertaking and of undertakings' associations in cases where there are serious grounds for suspecting that the competition law or decisions of the competition authorities have been infringed. When carrying out such measures, the Competition Authority shall follow the provisions of the Code of Criminal Procedure concerning search and seizure. The Competition Authority must therefore obtain a court order authorising the search and seizure. The information obtained during such searches may be used by the Competition Authority to base its investigation on. However, those subjected to the search may challenge the legality of the seizure before a court, in accordance with the Criminal Code.
Despite the Competition Authority's extensive powers to obtain data to support its investigations, companies enjoy a limited right to confidentiality in competition law, which means that company representatives are not required to answer questions or provide information that involves subjective assessment of whether competition law has been breached.
To emphasise the significant obligation on companies and public authorities to provide data to the supervisory authority, breaches of the information obligation are subject to, among other things, administrative fines or daily fines, pursuant to Articles 37 and 38 of the Act.
In 2007, the criminal liability of individuals for breaches of competition law was further defined. The amendments made the criminal liability of individuals clearer and provided for more detailed provisions on division of labour and cooperation between the competition authorities and the police in the investigation of offences against competition law.
The criminal liability of individuals for breaches of competition law is limited to offences involving illegal agreements, which are considered the most serious breaches of competition law. The reason for this is that in cases where collusion is suspected, significant interests of consumers and business are at stake, as illegal collusion between companies can result in serious economic harm. Under the current competition law, an individual, i.e. an employee or director of a company, who carries out, encourages or has carried out concerted action, may be subject to fines or imprisonment for up to six years. Specifically, the criminal liability covers collusion on prices, discounts, surcharges or other commercial terms, collusion on the division of markets and the restriction of production, collusion on the making of offers, collusion to refrain from dealing with certain companies or customers, and the provision of information on these specific matters. It also includes collusion between companies that aims to prevent them from competing with each other.
Individuals who commit competition law infringements are only subject to a public investigation following a complaint by the Competition Authority to the police. The Competition Authority assesses on a case-by-case basis, taking into account the gravity of the infringement, whether to refer a case to the police. It is important that the Competition Authority maintains consistency in the handling of comparable cases. It should also be noted that the Competition Authority may decide not to prosecute an individual if he or the company he works for has taken the initiative to provide the Competition Authority with information or evidence concerning infringement of competition law which can lead to the proof of the infringements or is considered a significant contribution to the evidence already in the possession of the Competition Authority.
The Competition Authority is authorised to hand over to the police authorities any data and information it has obtained relating to the alleged offences under investigation. Likewise, the police may hand over to the Competition Authority any data and information that is relevant. Furthermore, the Competition Authority is authorised to participate in police operations concerning the investigation, and the police are likewise authorised to participate in the operations of the competition authorities.
Complaints and enquiries regarding unfair business practices, including false or misleading advertising, should be directed to the Consumer Authority, which took over these responsibilities from the Competition Authority and the Competition Council on 1 July 2005. The supervision of unfair business practices and market transparency are provided for in law. No. 57/2005
Alleged breaches of competition law should be referred to the Competition Authority. However, it should be noted that competition law is general legislation which applies to the electricity market insofar as it is not overridden by specific legislation in this area. Under current legislation, competition primarily extends to the generation and sale of electricity, whereas its transmission and distribution will remain a monopoly activity, which is largely regulated. Energy Agency.
Further information on electricity prices and contracts with electricity suppliers can be found on the website. Energy Agency.
Through our website, the public has the opportunity to send a submission to the Competition Authority. suggestions ...of a possible breach of competition law. When assessing whether such notifications warrant an investigation, the Competition Authority considers, among other things, the potential impact of the alleged infringement or restrictions on competition and the severity of the potential breaches.The experts at the Competition Authority each monitor one or more markets. If the Authority's experts become aware of unusual market behaviour, they can take action and the Competition Authority can subsequently launch an investigation into the matter on its own initiative. The first steps in such an investigation are often for the Authority to gather data and information on business practices and activity in the relevant market. If such an investigation indicates that something is amiss, the Competition Authority can investigate the matter further and take action. Cases taken up on the Competition Authority's own initiative can thus be initiated on the basis of tips from the public or businesses, information appearing in the media, and an assessment of the competitive conditions in specific markets. The Competition Authority may also investigate a matter on the basis of formal complaints received from companies or other interested parties who believe they have been wronged. In rules of procedure The Competition Authority states that anyone is permitted to approach it and draw attention to incidents which they believe breach competition law.
The Competition Authority emphasises that information which serves as guidance on the application of competition law should be accessible to the public and businesses. To this end, the Authority maintains a website with a wide range of information, where publications are published. decisions, News, columns, reports, opinion, and various educational materials. The website was last reviewed in October 2012 in order to make it even more accessible for users. The Competition Authority is also on Facebook and Twitter. It publishes a variety of educational material on lighter topics, in addition to the usual content. In addition, the Competition Authority provides companies and others with information on new decisions, news and reports.
The Competition Authority has published a number of reports on the competitive conditions in various markets, both on its own and in cooperation with the competition authorities in the other Nordic countries. These reports have often been followed up by conferences which have been well attended. Here on this link Reports, speeches and presentations of the Competition Authority can be found.
It must be emphasised that previous decisions of the Competition Authority and opinions published on the authority's website are intended to provide the market with extensive guidance. On the authority's website, for example, its decisions contain analyses of the dominant position in numerous markets. In many cases, there is also a detailed, well-reasoned guide on what dominant undertakings are permitted to do and what they are not. However, the Competition Authority does not, as a rule, provide companies with advance guidance on whether they might be in a dominant position. Despite this, the Competition Authority offers companies and their organisations the opportunity to hold meetings with its staff, where information and opinions can be exchanged on competition matters. It is worth emphasising that the Competition Authority's view is that the companies themselves operating in competitive markets have the best information on whether or not they are dominant. If a manager believes they can use their company to drive a competitor out of the market, they also know they must be careful not to do so through actions that are not based on fair, objective business practices and on reasonable cost considerations. What he must not do is well known. For example, he must not enter into exclusive purchasing agreements, he must not undercut, and he must not launch specific attacks directed against a small competitor. But he may compete on a fair basis.
According to the procedural rules of the Competition Authority, anyone may contact the Competition Authority to report an incident which they believe breaches competition law or distorts competition. There are several ways for the public to provide information to the Competition Authority.
First, it should be noted that it is possible to send a complaint to the Competition Authority. suggestions about possible breaches of competition law via the Competition Authority's website, either anonymously or under a name. The Competition Authority records and reviews all the tips it receives, and also investigates whether there is cause for intervention by the Competition Authority. Such tips can form the basis for the Competition Authority to initiate an investigation of its own accord. It should be noted that a person who sends a tip to the Competition Authority is not considered a formal party to any case that may be initiated as a result.
Information can also be provided to the Competition Authority via its email address., samkeppni@samkeppni.is or by calling 585-0700 and speaking to the specialists at the Competition Authority. The Competition Authority employs economists and lawyers, among others, and these specialists are tasked, amongst other things, with each monitoring the competitive situation in one or more markets.
Furthermore, the Competition Authority receives various information during meetings it holds with both companies and other market participants.
Finally, it is worth pointing out that those with an interest to protect who believe they have been wronged can, of course, send a formal submission to the Competition Authority, requesting that the Authority investigate the matter on the basis of the submission. Information on the requirements for formal submissions can be found in Article 6 of the Competition Authority's Rules of Procedure. No. 880/2005.
Currently valid Competition law They are largely based on international models but also take into account Icelandic circumstances. Icelandic competition law is in many respects modelled on the competition rules of the European Union. Of particular note are Iceland's obligations under the Agreement on the European Economic Area (the EEA Agreement) and the European Union regulations which have been incorporated into the EEA Agreement.
In this context, it should be noted that the provisions of competition law prohibiting illegal collusion and the abuse of a dominant position by undertakings are based on the corresponding provisions of the EEA Agreement. Furthermore, the merger control rules of the Competition Act are largely based on the European Union's merger regulations. When interpreting the aforementioned provisions, the Competition Authority therefore generally takes into account the EEA/EU competition law.Finally, it should be noted that the competition rules of the EEA Agreement apply alongside the Icelandic Competition Act. They are applied when agreements and decisions of undertakings in the EEA area can have a direct or indirect effect on trade within the area.
Until mid-2005, the Competition Authority (together with the Competition Council) enforced the prohibition on and supervision of restrictive practices, and was responsible for monitoring unfair commercial practices and market transparency. On 1 July 2005, the Consumer Authority was established by law. No. 62/2005 and it took over the latter part of the Competition Authority's work, along with other tasks. At the same time as the Consumer Authority was established, competition laws came into force. No. 44/2005 and the Competition Authority was then established. The tasks of the Competition Authority include the competition supervision previously carried out by the Competition Institute and the Competition Council. This background may explain why some people are not entirely clear about which responsibilities fall under the Consumer Authority and which under the Competition Authority. Laws No. 57/2005 The supervision of business practices and marketing is, among other things, intended to ensure that companies do not apply unfair business practices in its promotional activities to the detriment of consumers. It is difficult to define precisely what constitutes unfair commercial practices, but the provisions dealing with them include a ban on false and misleading information about a product, including in advertisements, a ban on the use of misleading identities, including online, and other prohibitions to the same effect. Article 8 of the Act on the Supervision of Business Practices states that business practices are unfair if they are contrary to good business practice towards consumers and significantly distort, or are likely to significantly distort, consumers' financial behaviour. The Act on the Supervision of Business Practices and Marketing also contains provisions on warranty declarations, duties of confidentiality, etc. These rules concern the obligation of suppliers of goods and services to provide written instructions where necessary for the assessment of the characteristics of the goods and services, a prohibition on providing warranty statements that grant rights equal to or worse than those provided by law, a prohibition on obtaining or attempting to obtain trade secrets in the course of business by improper means, and a prohibition on the unauthorised use of official and international marks in marketing and promotion. Finally, the Act on the supervision of business practices and marketing contains provisions onPricing and market transparency. Article 17 of the Act states that companies selling goods or services to consumers must either mark goods and services with the price or display it in such a prominent manner at the point of sale that it is easy for consumers to see. The Consumer Authority conducts surveys to check whether companies fulfil these obligations. The Consumer Authority also supervises various other laws, including laws No. 80/1994about journeys, laws No. 121/1994 regarding consumer loans, law No. 46/2000 on door-step and distance selling agreements and laws No. 30/2002 on electronic commerce and other electronic services.
It usually involves some cost and effort for a company to start operating in a new market. The obstacles that companies must overcome in order to operate in markets where they have not operated before are often referred to as barriers to entry. The academic definition of barriers to entry that many economists seem to agree on is attributed to George Stigler (1911–1991), who is associated with the so-called Chicago School of economics and received the Nobel Prize in Economics in 1982. Stigler's definition of barriers to entry was that they consisted of „the cost of production that firms wishing to enter a market must bear in excess of those firms already operating in the market.“ There are various other definitions of barriers to entry; for example, that a barrier to entry is anything that allows firms operating in a market to make unusually high profits from their operations without having to fear that new firms will enter the market. There is also the definition that a barrier to entry is anything that prevents a company from entering a new market when that entry would increase national economic welfare.
If there are no barriers to entry in a market, new companies are expected to enter and start operating in it as soon as profit opportunities arise. This has the consequence that such a market can be more efficient than markets that have barriers to entry. Various types of barriers to entry are a feature of many markets, and a significant amount of time for competition authorities around the world is spent trying to reduce, or remove, existing barriers to entry to increase their efficiency.
Three categories of access barriers
Competition authorities around the world generally look at three types of barriers to entry in their investigations, which are often divided into the following categories according to their nature:
- Natural barriers to access
- Barriers arising from laws and regulations
- Barriers due to the behaviour of companies operating in the market
Natural barriers to entry include, for example, sunk costs. Sunk costs are considered to be those costs that cannot be recovered if a company that has started operations decides to cease trading. In industries where there are significant economies of scale, this fact alone can constitute a barrier to entry, as companies in most cases need to reach a certain minimum size in order to produce the relevant product cost-effectively.
Laws and regulations can, in many cases, contribute to positive externalities, e.g. the protection of the environment or the safeguarding of financial stability, but can also involve certain barriers to entry. For example, in many cases, companies need to have certain licences in order to be able to carry out their activities. If the number of licences is limited and they are not traded on a free market, it can be difficult for a new company to enter the market.
Finally, the behaviour of firms operating in the market can act as a barrier to entry. They can make it unattractive for new entrants to enter by, for example, investing in excess capacity. In some cases, they can also arrange matters so that it is not attractive for their customers to switch to another provider. An example of this is the use of so-called loyalty discounts.
Measures to reduce access barriers
When handling cases, the Competition Authority always considers the barriers to entry present in the specific market under review and seeks to assess whether these barriers can be reduced or removed. When barriers to entry stem from laws, regulations or actions by public authorities, the authority can advocate for these barriers to be reduced, for example by issuing opinions or by proposing changes to legislation. However, when the barriers stem from the behaviour of dominant firms operating in the market, the authority can investigate the matter further and take action where necessary.
The Competition Authority is authorised under competition law to impose administrative fines on undertakings or associations of undertakings that breach certain provisions of the competition law. The main purpose of administrative fines is to have a general and specific deterrent effect, which contributes to the enforcement of competition law and thereby to increased competition. Administrative fines are also intended to improve compliance and make competition law more effective.
Fines for companies for breaches of competition law can amount to up to 10% of their annual turnover. Thus, a company with an annual turnover of 10 billion króna that has participated in a serious and extensive breach of competition law for many years could face a fine of up to one billion króna if its guilt is proven. Under competition law, the Competition Authority shall, when determining the amount of fines, take into account the nature and gravity of the infringements, their duration, and whether they are repeated. Other factors may also be taken into account, either to increase or decrease the fines, such as the size of the companies involved, the state of mind of the management and profit considerations.
Various other factors can also influence the determination of fines by the Competition Authority. For example, fines may be waived or reduced if a company that has participated in an illegal cartel has taken the initiative to inform the competition authorities about the illegal cooperation. By blowing the whistle on the collaboration and cooperating with the Competition Authority's investigation, companies can avoid fines or have their fines reduced significantly. The Competition Authority has established rules on the waiver and reduction of fines, which allow companies participating in an illegal cartel to withdraw from the collaboration. These rules can be accessed here.
The Competition Authority can also conclude cases by settlement and waive or reduce fines for companies that, on their own initiative, come forward and provide information about, or acknowledge, competition law infringements. A decision to impose a fine may also be waived if the infringement is considered minor, or if for other reasons such fines are not considered necessary to promote and strengthen effective competition.
The Competition Authority is a regulatory body tasked with promoting competition in business and applying the remedies permitted by competition law in order to contribute to the achievement of the law's objectives. The Competition Authority's role is therefore not to grant specific rights to citizens, but to prevent companies and public bodies from distorting competition. Thus, the main role of the Competition Authority is to enforce the policy set out in the Competition Act, rather than primarily resolving disputes. In order to implement the policy of the Act and carry out the supervision entrusted to the Competition Authority, it is necessary for the Authority to be able, in general terms, to manage the use of the personnel at its disposal so as to tackle the tasks it deems most urgent in order to promote competition and stuto promote healthy business practices.
With the current competition law, this framework was strengthened and the Competition Authority was granted specific authority to decide which cases warrant an investigation. This power is modelled in part on European competition law, where, for example, the EFTA Surveillance Authority and the European Commission have the power to prioritise cases.
The Competition Authority is a small organisation with just over 20 employees. Its tasks, however, are extensive and cover the entire business sector. Since the financial crash, the number of cases has increased by 80% at the same time as the authority's funding for its core activities has been reduced by 20% in real terms. For this reason, the Competition Authority has had to apply strict project prioritisation. For example, in 2012, around a third of the Authority's intervention time was spent on cases initiated at its own instigation, whereas this proportion averaged around half of its intervention time in the years before the crash and the early years of the recovery.
The cases handled by the Competition Authority vary in size. A great deal of time is spent on a few large cases – for example, 15 cases accounted for half of the authority's handling time in 2012. The remaining time is spread across around 300 cases.
The Competition Authority has spent the most time over the last four years investigating the abuse of a dominant position, with an average of 35% of its disposal time being devoted to these cases from 2009 to 2012. Around 25% of the time spent has been on investigations into illegal collusion, 20% on merger cases, 15% on market analyses and 5% on public procurement restrictions.
The Competition Authority devotes approximately two-thirds of its time to four markets, namely financial services, the retail market, telecommunications, and transport and tourism.
There are various things that managers of companies in the market can do to minimise the risk of the company breaching competition law. The most important thing in this regard is to be familiar with the provisions of the law that prohibit anti-competitive cooperation between companies and the abuse of a dominant market position. In this context, it is essential for managers and other employees to understand and be aware of the company's competitive position. Knowledge of the company's competitive position contributes to more informed and faster business decisions and more effective competition for the benefit of both the company and consumers, as well as potentially preventing legal violations.
Part of the preventative measures taken by larger companies to avoid breaches of competition law can be found in regularly holding competition law training courses and preparing a competition law handbook for key managers and employees. A good tool for ensuring that a company operates in accordance with competition law is to formulate a competition policy as part of its business operations. Such a policy can, for example, include a requirement that all directors, managers and other employees are informed of the requirements that competition law places on companies in a competitive market. Appointing a dedicated competition compliance officer can also be a good way to minimise the risk of breaches of competition law for companies in a dominant market position. Furthermore, the implementation of a dedicated competition compliance programme can also be a useful tool in this regard. The implementation of such a programme is common practice in our neighbouring countries. The programme includes, amongst other things, an analysis of the main risk factors in the company's operations.
In order to make a realistic assessment of a company's competitive risk, answers are required to various questions concerning factors related to the markets in which the company operates, its market position, business and competitive practices, etc. For example, the following factors may be mentioned: What are the product and geographical markets in which the company operates? Is the company in a dominant position in any of these markets? What obligations are imposed on customers? Are the company's contracts and terms and conditions in compliance with competition law requirements? How is pricing conducted? Are employees in contact with the company's competitors?
It is usually the companies themselves that have the best information about their position in the market and whether or not they are dominant. If a manager believes, for example, that they can use the company to drive a competitor out of the market, then it is highly likely that such actions would constitute a breach of competition law. What a dominant company may not do is fairly well known. For example, it may not enter into exclusive purchasing agreements, it may not engage in so-called predatory pricing, and it may not launch specific attacks directed against a small competitor. But it may compete on a level playing field. If companies are in any doubt as to whether a particular course of action complies with competition law, there are various avenues available. Companies can seek expert advice or familiarise themselves with information on markets and competition matters that is already available. Decisions of the Competition Authority, as well as various informational and educational materials, are published on the authority's website and provide the market with extensive guidance.
In this question, the word „competition“ refers to competition between companies in the marketplace, i.e. the effort by companies to win business, if necessary at the expense of their competitors, by offering low product prices and good service. If competition is limited, there is a tendency for prices to rise significantly above the cost of producing, distributing and selling a product or service. The quality of a product or service and the incentive to innovate may also diminish in the absence of effective competition. Effective competition, in turn, provides a check on companies, encouraging them to keep prices low and improve the quality of what they sell.
Iceland is a sparsely populated country compared to its main comparators, e.g. the United Kingdom, Norway and Denmark. Furthermore, Iceland is an island, which in most cases limits the size of geographical markets here, partly due to the time and cost of transporting goods and services to the country. For this reason, companies operating in Iceland's neighbouring countries provide limited competitive pressure here. From the above, it follows that relatively few companies often operate in important competitive markets in Iceland. When market conditions are like this, such markets are referred to as oligopolies.
In oligopolistic markets, there is significant Consolidation of companies. One method for assessing concentration in individual markets is to use the so-called Herfindahl-Hirschman Concentration Index (HHI). This index is used by both US and European competition authorities. The HHI is the sum of the squares of the market shares of all firms operating in the relevant market. Its value ranges from 0 to 10,000. The higher it is, the greater the market concentration. An HHI below 1000 is considered to indicate low market concentration, an HHI between 1000-1800 signifies moderate market concentration, and it is considered high when the HHI is above 1800. Competition authorities have concluded in various decisions concerning important consumer markets in this country that concentration is considerable in the relevant markets. The greater the market concentration, the greater the general risk of anti-competitive effects. This is particularly the case with regard to infringements of Article 11 of the Competition Act No. 44/2005, which prohibits the abuse of a dominant position. Furthermore, high market concentration can have a significant impact on the assessment of the competitive effects of mergers.
Finally, the situation where a few large companies operate in a particular market and there are various social ties between the companies' executives, as is common in this country, may lead to a greater risk of competitors coordinating their behaviour. Such coordination can consist of the companies mutually taking each other into account in their operations or of them engaging in unlawful collusion. In line with the above, it must be considered that there is generally a greater risk of competition being distorted in smaller economies, where competition is also typically limited.
Under competition law, all competition-restricting cooperation between companies is prohibited. This can include, for example, consultation on prices, pricing, discounts or other commercial terms. It is also unlawful to consult on matters such as the submission of tenders when goods or services have been put out to tender. Furthermore, companies are prohibited from dividing markets among themselves, for example by customer or geographical area. All cooperation as described here creates a risk that companies will start to take each other into account, which reduces effective competition.
However, competition law recognises that in certain circumstances, cooperation between companies can contribute to, amongst other things, increased rationalisation, efficiency and the promotion of technological progress. For such cooperation to be permitted, its positive effects must outweigh the negative ones. This is the case when it is proven that the conditions of competition law for an exemption from illegal collusion are met.
Article 15(1) of the Competition Act sets out the conditions that must all be met for the collaboration to be exempt from the prohibition on illegal collusion. These include that the cooperation contributes to improved production or distribution, promotes technical and economic progress, and provides consumers with a fair share of the resulting benefits. Furthermore, it is important that the cooperation does not go beyond what is necessary and does not restrict competition in a substantial part of the market.
It is for the relevant undertakings or association of undertakings to assess whether a collaboration they intend to enter into is compatible with competition law. They are therefore solely responsible for ensuring that a correct assessment is made as to whether the collaboration fulfils the above-mentioned competition law conditions for it not to be considered unlawful.
The Competition Authority has issued Instructions on exemptions from illegal collusion and the application of Article 15 of the Competition Act, and are intended to make it easier for businesses to comply with the law and to assist in assessing whether a collaboration falls within the scope of the provision.
Before the self-assessment system was introduced here on 1 January 2021, it was the role of the Competition Authority to grant companies a formal exemption from the prohibition provisions of Articles 10 and 12. subsections of the Act, if it was considered that companies had demonstrated that the conditions of Article 15 of the Competition Act were met. The Competition Authority has therefore granted numerous exemptions from the prohibition provisions of the Competition Act under the previous legislation. To a certain extent, companies can take into account the previous decisions of the Competition Authority and, where applicable, rulings of the Competition Appeals Board and the courts when assessing whether a collaboration fulfils the conditions of Article 15 of the Competition Act. However, it should be borne in mind that the guidance value of older decisions may be affected by the fact that they were taken under a different legal framework to that which came into force on 1 January 2021. Thus, older decisions may have limited guidance value in a self-assessment system with regard to the evidential requirements, and it is therefore important that companies independently assess the relevant collaboration at all times. This is addressed in the Competition Authority's guidelines, see paragraphs 59-61 and 94.