Definition
Merger rules are one of the cornerstones of competition law and play an important role in preventing the competitive structure of markets from being altered, through mergers or acquisitions, in a way that eliminates or restricts competition.
In Icelandic competition law (link to the Act on the Althingi website – opens in a new window) No. 44/2005 Mergers are governed by Articles 17 and 17a to 17e of the Act. The Competition Authority supervises mergers of undertakings falling within these provisions, in accordance with the Competition Authority's rules. No. 1390/2020
In a nutshell
When companies merge or one company acquires control, directly or indirectly, over another company, it must be examined whether the merging companies will gain a dominant position, whether their dominant position will be strengthened, or whether competition in the relevant market will otherwise be significantly impaired. Mergers must be notified to the Competition Authority, provided certain conditions are met. The Competition Authority can annul a merger or impose conditions on its completion.
Companies' duty to notify in merger matters
The merger rules of competition law provide that companies which acquire control of another company are required to make a notification when certain conditions are met. A merger must therefore be notified to the Competition Authority when the combined turnover of the undertakings concerned is ISK 3 billion or more in Iceland, and at least two of the undertakings involved in the merger have a turnover of at least ISK 300 million. kr. in annual turnover in Iceland each. However, the Competition Authority may require the merger parties to submit a merger notification even if the above conditions are not met, if the combined total turnover of the companies concerned exceeds 1.5 billion kr. per year.
A merger must be notified to the Competition Authority before it is implemented, but after an agreement for it has been made, a takeover bid has been publicly announced, or a controlling interest in a company has been acquired. A merger subject to the provisions of the Competition Act must therefore not be implemented while the Competition Authority is reviewing it.
The merger notification shall provide information on the merger, the undertakings involved, the relevant markets and any other necessary matters for the assessment of the merger's effects on competition. In the rules of the Competition Authority No. 1390/2020 In relation to notification and procedure in merger matters, the information to be included in the notification is specified in more detail. A shorter notification is permitted if one of the conditions set out in paragraphs a to e of subsection 6 of article 17a is met. competition law, such as where the markets in which the effects of the merger are felt are not connected.
A special merger fee of kr. 500,000 for a longer notice and 200,000 for a shorter notice must be paid upon submission of the merger notice. Bank account 0001-26-25874, VAT no. 540269-6459. Receipts should be sent to the email address samkeppni@samkeppni.is
The Competition Authority's power to annul mergers or impose conditions
The Competition Authority may annul a merger or impose conditions on it if the Authority considers that the merger would prevent effective competition by creating or strengthening a dominant position, or would otherwise significantly distort competition in the market.
The Competition Authority shall, within 25 working days, notify the party that submitted the merger notification to the Authority if it considers there are grounds for a further investigation into the merger's effects on competition. A decision on the prohibition of a merger shall be taken no later than 90 working days after such notification has been sent. If merging parties, who have requested settlement talks with the Competition Authority, put forward possible conditions for the merger on the 55th business day of the second phase of the investigation or later, the deadline for the merger investigation is automatically extended by 15 business days. At the request of the merging parties, the Competition Authority is authorised to extend the above-mentioned merger investigation deadlines by up to 20 working days.
In the case of a short notice, the Competition Authority may require a longer notice if the conditions of paragraph 6 of Article 17a are met. competition law are not met or if it is deemed necessary to assess the competitive effects of the merger.
Consolidation fee
A specific merger fee must be paid upon submission of a merger notification, amounting to kr. 500,000 for a longer notification and kr. 200,000 for a shorter notification. The Competition Act states that the company notifying the merger must pay the merger fee. The Competition Authority's deadlines for investigating mergers begin to run once a sufficient merger filing has been received by the Authority and the merger fee has been paid.
Payment details: Bank account 0001-26-25874, VAT no. 540269-6459.
The receipt must be sent to the email address. samkeppni@samkeppni.is
Consolidation notifications
When to notify a merger?
The merger rules of competition law provide that companies which acquire control of another company are required to make a notification when certain conditions are met. A merger must therefore be notified to the Competition Authority when the combined turnover of the undertakings concerned is ISK 3 billion or more in Iceland, and at least two of the undertakings involved in the merger have a turnover of at least ISK 300 million. kr. in annual turnover in Iceland each. However, the Competition Authority may require the merging parties to submit a merger notification even if the above-mentioned conditions are not met, if the combined total turnover of the companies concerned exceeds 1.5 billion kr. per year.
A merger must be notified to the Competition Authority before it is implemented, but after an agreement for it has been made, a takeover bid has been publicly announced, or control of an undertaking has been acquired. A merger subject to the provisions of the Competition Act must therefore not be implemented while the Competition Authority is reviewing it.
What must be included in a merger notification?
The merger notification shall provide information on the merger, the undertakings involved, the relevant markets and any other necessary matters for the assessment of the merger's effects on competition. In the rules of the Competition Authority No. 1390/2020 In relation to notification and procedure in merger matters, the information to be included in the notification is specified in more detail. A shorter notification is permitted if one of the conditions set out in paragraphs a to e of subsection 6 of article 17a is met. competition law, such as where the markets in which the effects of the merger are felt are not connected.
Annex I to the aforementioned regulations sets out a detailed list of the information to be included in a merger notification to the Competition Authority. A shorter notification is permitted if one of the conditions set out in paragraphs a to e of Article 17a(6) is met. competition law, for example, if the markets in which the effects of the merger could be felt are not related. In such cases, it is not necessary to provide as extensive information as for a standard merger notification, and an exhaustive list of the information to be included with a short notification can be found in Annex II of the Competition Authority's regulations. No. 1390/2020 on notification and procedure in merger matters.
The signed merger document shall be submitted to the Competition Authority on the 2nd floor of Borgartún 26, Reykjavík.
A specific merger fee must be paid upon submission of the merger notice, amounting to kr. 500,000 for a longer notice and 200,000 for a shorter notice. The account number is 001-26-25874, VAT no. 540269-6459. The explanation must state the merger for which the payment is being made, and proof of payment should be sent to the email address samkeppni@samkeppni.is.
When can company mergers take effect?
Once mergers have been notified to the Competition Authority, they may not be implemented until the Authority has completed its review. Mergers must be notified before they take effect, but after an agreement for them has been made, a takeover bid has been publicly announced, or control of an undertaking has been acquired.
The Competition Authority has 25 working days to examine the competitive effects of a merger after it has been duly notified (Phase I). If the Competition Authority deems a further investigation of the merger's effects on competition necessary, it shall notify the merging parties. The Competition Authority's decision on the prohibition or conditional approval of a merger must be made no later than 90 working days after the relevant undertakings were notified of a further investigation into the merger (Phase II). If merging parties, who have requested settlement talks with the Competition Authority, put forward possible conditions for the merger on the 55th working day of the second phase of the investigation or later, the deadline for the merger investigation is automatically extended by 15 working days. At the request of the merging parties, the Competition Authority is authorised to extend the above merger investigation periods by up to 20 working days. The merger may not be implemented while such an investigation is ongoing.
Article 17(a), paragraph 4 of the Competition Act provides that the Competition Authority may, upon request, grant an exemption from the prohibition on the implementation of a merger while it is under consideration, provided that it is demonstrated that a delay in the implementation of the merger could harm the undertakings concerned or their trading partners and that competition is at risk. The request must be reasoned and submitted in writing. The exemption may be subject to conditions in order to ensure effective competition.
The Competition Authority's power to annul mergers or impose conditions
All notified mergers are investigated by the Competition Authority to determine whether they will significantly impede competition in the market, or whether a dominant position will be created or strengthened. If this is not the case, the mergers are approved without intervention from the Authority.
The Competition Authority may annul a merger or impose conditions on it if the Authority considers that the merger would prevent effective competition by creating or strengthening a dominant position, or would otherwise significantly distort competition in the market.
Even if the Competition Authority believes that a notified merger could have an adverse effect on competition, such a merger can be approved with conditions that prevent its harmful effects. This is done by way of a settlement with the merging parties under Article 17(f). The Competition Authority then monitors compliance with these conditions and can take action if they are not met.
The Competition Authority shall, within 25 working days of receiving a merger notification, inform the notifying party if it considers a further investigation of the merger's effects on competition to be necessary.A decision on the clearance of a merger shall be taken no later than 90 working days after such notification has been sent, unless the above-mentioned factors which may affect the deadlines apply.
Breach of the duty to notify and the prohibition on implementing a merger
Please be advised that there is a legal obligation to notify mergers that meet the criteria of the Competition Act. The Competition Act also provides that a merger may not be implemented before the Competition Authority has concluded its review. In cases of non-compliance with the notification obligation and the prohibition on implementing a merger, the Competition Authority is obliged to impose administrative fines on the undertakings or association of undertakings responsible for such breaches. Where conditions have been imposed on a merger on the basis of a settlement, a breach of such conditions will also be subject to administrative fines. This is further dealt with in Chapter IX of the Competition Act on penalties.
Fines may amount to up to 10% of the total turnover in the last financial year of any company or association of companies involved in the infringement. If the infringement of an association of undertakings relates to the activities of its members, the amount of the fine shall not exceed 10% of the total turnover of each of its members which is active in the market concerned by the infringement of the association. When determining the amount of fines, regard shall be had to the nature and gravity of the infringements, their duration and whether they are repeated.
Status of mergers
Here you can find an overview of the status of the latest merger cases under investigation by the Competition Authority. A more detailed status, as well as a list of cases investigated during the year, can be viewed on the „Status of merger cases“ page. Finally, more detailed information on deadlines and the merger review procedure can also be found there. Please note that merger cases may be at the pre-notification stage, but such pre-notifications are subject to confidentiality and these cases will not appear on the list below.
Handling of merger cases and procedural speed
The Competition Authority endeavours to resolve cases in the shortest possible time, but by its very nature, investigations into proposed mergers can be complex and comprehensive. While an investigation is underway, the merger must not be implemented.
The Competition Authority will not investigate a merger until a sufficient merger notification has been submitted to the Authority. In other words, this means that the merger notification in question complies with the Competition Authority's rules on notifications and merger proceedings and therefore contains the necessary information on matters that may be relevant to the assessment of the merger's effects on competition.
Once a merger notification has been received which the Competition Authority deems sufficient, statutory time limits begin to run, and the merger will then appear in the overview above.
The Competition Authority and companies can also have pre-notification merger discussions to prepare the notification and the subsequent proceedings. Such discussions are confidential and take place before a notification is submitted and before any deadlines begin to run.
Deadlines in merger cases
The Competition Authority has 25 working days for an assessment of the competitive effects of a merger after it has been duly notified. At this stage, the investigation is considered to be at „phase l.“
If the Competition Authority deems there to be cause for a further investigation into the competitive effects of a merger, the authority shall notify the merging parties of this. This part of the investigation is called „phase two“
The decision of the Competition Authority to annul or impose conditions on a merger shall be made available, no later than 90 working days after the relevant companies were sent a notification of a further investigation into the merger (i.e. a Phase II notification).
If merger parties, who have requested settlement talks with the Competition Authority, submit possible conditions for the merger on the 55th business day of the second phase of the investigation or later, the deadline for the merger investigation is automatically extended by 15 business days.
At the request of the merging parties, the Competition Authority is permitted to extend the above-mentioned merger investigation deadlines by up to 20 working days.
All notified mergers are investigated by the Competition Authority to determine whether a dominant position will be created or strengthened, or whether they will otherwise lead to a significant distortion of competition in the market. If this is not the case, the mergers are approved without intervention from the Competition Authority.
Frequently Asked Questions
A merger for the purposes of competition law is considered to have taken place when there is a lasting change in control in the following four cases:
- due to the merger of two or more companies or parts of companies that previously operated independently
- when a company takes over another company
- because one or more parties, who already have control of at least one undertaking, or one or more undertakings, acquire direct or indirect control, in whole or in part, over one or more additional undertakings by acquiring securities or assets, by contract or otherwise
- by establishing a company for a joint venture to permanently undertake all the activities of an independent economic unit
The takeover of one company by another, or a merger of companies, can lead to a reduction in existing competition, or it can even disappear completely. This can result in the creation of a company with a dominant market position, or even a monopoly. This can harm consumers through higher prices, a smaller choice of products and less innovation. By monitoring corporate mergers, it is possible to prevent harmful effects on competition.
Merger rules are therefore one of the cornerstones of competition law and play an important role in preventing the competitive structure of markets from being altered, through mergers or acquisitions, in a way that eliminates or restricts competition.
The merger notification obligation becomes effective when the combined turnover of the undertakings concerned is ISK 3 billion or more in Iceland, and at least two of the undertakings involved in the merger each have an annual turnover of at least ISK 300 million in Iceland.
However, the Competition Authority is authorised to require notification of mergers that do not meet these conditions if the authority believes that they could significantly reduce effective competition and if the combined turnover of the companies concerned is greater than 1.5 billion króna. per year.
It is then permitted to notify a merger with a short notice if at least one of the conditions set out in points a to e of paragraph 6 of Article 17a is met. competition law, such as where the markets in which the effects of the merger are felt are not connected.
A merger must be notified before it is implemented, but after an agreement for it has been made. A takeover bid or acquisition of control of an undertaking is publicly announced. A merger that falls under the provisions of competition law must not be implemented while the competition authority is reviewing it.
The Competition Authority has 25 working days to assess the competitive effects of a merger after it has been notified. If the Competition Authority deems a further investigation of the merger's competitive effects necessary, the authority shall notify the merging parties. The Competition Authority's decision to annul or impose conditions on a merger must be made no later than 90 working days after the relevant undertakings were notified of the further investigation into the merger. In certain circumstances, this deadline is extended.
The merger must not be implemented while such an investigation is ongoing.
It is generally believed that mergers of smaller companies are not harmful to competition. Therefore, under competition law, it is only mandatory to notify the Competition Authority of a merger when the combined annual turnover of the companies involved is three billion krónur or more in Iceland. Furthermore, for notification to be mandatory, at least two of the companies involved in the merger must each have a minimum annual turnover of 300 million króna in Iceland. However, notwithstanding these general turnover conditions, the Competition Authority has the power to require notification of a merger if the combined total turnover of the merging companies is more than 1.5 billion króna. The Competition Authority, however, only exercises this power in exceptional circumstances, i.e. when the authority considers that a merger which does not meet the general turnover criteria could reduce effective competition.
The merger of companies operating in the same competitive market, a so-called horizontal merger, can be detrimental to competition in that market. The merger reduces the number of competitors in the relevant market by at least one, which can be problematic in Iceland where there are many so-called oligopolistic markets. Examples of oligopolistic markets in Iceland include the aviation market, the market for scheduled freight services, and the oil market. A merger can, in such circumstances, lead to the merged company attaining a dominant market position or strengthen a dominant position that existed prior to the merger. In cases where a merger is considered to be harmful to competition, the Competition Authority can annul the merger or impose conditions intended to remedy the harm.
Finally, it should be noted that the merger of smaller companies in a particular market can sometimes be desirable and lead to more effective competition in the market. Through the merger, the combined companies can provide larger competitors in the relevant market with greater and stronger competitive pressure than they could individually.
The merger notification shall provide information on the merger, the undertakings involved, the relevant markets and any other necessary matters for the assessment of the merger's effects on competition. In Annex I to the Competition Authority's rules No. 1390/2020, The information which must be included in the notification is specified in more detail in the guidelines on notification and procedure in merger matters, which are available on its website.
A shorter notice is permitted if one of the conditions from a to e of paragraph 6 of article 17a is met. competition law, for example, if the markets in which the effects of the merger could be felt are not related. In such cases, it is not necessary to provide as extensive information as for a standard merger notification, and an exhaustive list of the information to be included with a short notification can be found in Annex II of the Competition Authority's regulations. No. 1390/2020 on notification and procedure in merger matters.
Article 17 of the Competition Act No. 44/2005 It deals with mergers of undertakings and the remedies available to competition authorities in this regard. The Competition Authority has the power to annul mergers if it considers that a merger hinders effective competition by creating or strengthening the dominant position of one or more undertakings. The Competition Authority's conclusions on the legality of mergers are based on information that the companies involved in the merger are required to submit. Pursuant to Article 17(3) of the Competition Act, the Authority has established rules No. 1390/2020 which specifies the information to be included in a merger notification. Such a notification shall contain the information, including documents, requested in the information schedule in the annex to the aforementioned rules. No. 1390/2020 The information must be accurate and sufficient. A list of the information that must be included in a notification to the Competition Authority about the merger of undertakings can be found here.
All notified mergers are investigated by the Competition Authority to determine whether they will significantly impede competition in the market, or whether a dominant position will be created or strengthened. If this is not the case, the mergers are approved without intervention from the Authority.
However, if the Competition Authority considers that a merger hinders effective competition by creating a dominant position or by strengthening an existing one, or otherwise significantly distort competition in the market, the competition authority may annul the merger or impose conditions on it.
Although the Competition Authority believes that a notified merger could have an adverse effect on competition, such a merger may be approved with conditions that prevent its harmful effects. The Competition Authority then monitors compliance with these conditions and can take action if they are not met.