Market research

Act No. 14 of 2011 amended the Competition Act in order to strengthen the Act and promote competition. This included, amongst other things, the addition of a new paragraph (c) to the first subsection of Article 16 of the Competition Act, which authorises the Competition Authority to take action against situations or conduct that prevent, restrict or distort competition. This amendment to the law authorised the Competition Authority to remedy or counteract impediments to competition that do not stem from companies' breaches of competition law, but rather from market failures which prevent the public and the business community from enjoying the benefits of effective competition in the in the relevant market. This is a legal authorisation for investigations and actions where the focus is not on eradicating past infringements, but on promoting better market functioning for the future.

Following the entry into force of Act No. 14/2011, the Competition Authority began an examination of the most appropriate way to ensure good administrative practices and procedures in the exercise of the new power in c. sub-paragraph of 1. paragraph 16 of the Competition Act. Consideration was given to the views expressed in the Althingi regarding the necessity for the procedures and investigations in such matters to be thorough. The model for the power in question was drawn in no small part from the United Kingdom, see the discussion in the Bill which became Act No. 14/2011. There, the competition authorities have decades of experience in applying a similar power.
As part of this preparation, in February 2012 the Competition Authority published the discussion paper „Market Investigations of the Competition Authority – A Discussion Paper on Intervention in Competitive Barriers in the Absence of a Breach of Competition Law“.“

Following consultations, the Competition Authority issued Regulation No. 490/2013 on market investigations, pursuant to the second paragraph of Article 8 of the Competition Act. The main purpose of the rules is to establish a clear framework for the Competition Authority's market investigations, as their conduct is, by its nature, different from the handling of traditional infringement cases or merger control. These rules provide for the scope and objectives of market investigations, their preparation and commencement, procedure, and the conclusion of investigations. Otherwise, market investigations, proceedings and decision-making shall be governed by Regulation No 880/2005 on the proceedings of the Competition Authority, and the Rules of Procedure of the Board of the Competition Authority No 902/2011, cf. 3rd paragraph of the aforementioned Article 10 of Regulation No 490/2013.
The Competition Authority launched a market investigation into the fuel market in 2013, see more here.

A market study is based primarily on an economic examination and analysis of the competitive environment within the relevant defined market. The research focuses on the market as a whole rather than its specific segments, and is therefore a good tool for gaining a comprehensive overview of the competitive conditions in the relevant market.
In essence, a market investigation involves the Competition Authority's examination of whether action should be taken against circumstances or conduct that distort competition to the detriment of the public. Circumstances include, for example, factors relating to the characteristics of the relevant market, including the structure or organisation of the undertakings operating within it. By conduct is meant any kind of behaviour, including an omission, which in some way has a detrimental effect on competition in the market, even if it does not breach the prohibitions of the Act.

The aim of market investigations is to identify potential barriers to competition and improve the competitive environment in markets where there are grounds to believe that conditions or conduct exist which prevent, restrict or have a detrimental effect on competition, to the detriment of the public. Such circumstances or conduct that reduce market efficiency may include, for example, significant concentration in the relevant market, substantial barriers to entry for new competitors, or the ability of smaller competitors to strengthen their position. This also includes the actions or inactions of companies or public authorities that reduce market efficiency.

 
Following a market investigation, the Competition Authority may assess whether there is cause to take necessary action to address circumstances or conduct that prevent, restrict or have a detrimental effect on competition, to the detriment of the public.