Frequently Asked Questions about merger cases

What is fusion?

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

What is the purpose of merger control?

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.

Do all company mergers need to be reported?

The merger notification obligation becomes effective when the combined turnover of the undertakings concerned is ISK 2 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 200 million in Iceland.

The Competition Authority, however, has the power to require merger parties to notify a merger that does not meet these criteria if the Authority believes that it could significantly reduce effective competition and if the combined turnover of the companies concerned is more than one billion kr. 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.

When can company mergers take effect?

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 a merger or to impose conditions on it shall be made no later than 70 working days after the relevant undertakings were notified of the further investigation into the merger. The merger may not be implemented while such an investigation is underway.

What should be included in a notification of a merger of companies?

The merger notification must provide information about the merger, the undertakings involved, the relevant markets and any other necessary matters for the assessment of the merger's effects on competition. Annex I to the Competition Authority's rules (pdf document – opens in a new window) No. 684/2008, 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 connected. In such cases, it is not necessary to provide as extensive information as for a standard merger notification, and a comprehensive list of the information to be included with a short-form notification can be found in Annex II of the Competition Authority's regulations. (pdf document – opens in a new window) No. 684/2008 on notification and procedure in merger matters.

In what circumstances are company mergers invalid?

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.

In which cases are mergers of companies made conditional?

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.