[This post was published as an article on Kjarninn on 31 March 2021]
In recent weeks, a public debate has arisen about competition policy and competition law enforcement. That discussion has covered the application of competition law in agriculture, fisheries and retail, competition in telecommunications infrastructure and criticism of the Competition Authority's procedures and operations, to name but a few.
It is to be welcomed that a debate is taking place in this country about competition matters and competition law enforcement. Such a debate is likely to create greater understanding and lead to improvements, provided it is based on facts. It should be borne in mind that oligopoly prevails in many sectors of Icelandic business life, and it is therefore urgent to build knowledge of competition rules and their enforcement.
This discussion also highlights the significant interests at stake in the application of competition law.
Criticism from those targeted by the research and interventions
In recent days, the Competition Authority has been particularly criticised by the management of companies that have been subject to interventions or investigations by the authority. Interest groups have also echoed this criticism.
It is understandable that people in such a position are unhappy with the actions of the Competition Authority. Often, a great deal is at stake for these executives and their companies. By their nature, their interests often do not align with those of smaller businesses, consumers, and the wider economy. For this reason, most nations have established competition laws and enforce them in a manner similar to that in this country.
It is also natural to ask whether the decisions of the Competition Authority are infallible. Of course they are not, any more than any other human endeavour. For this reason, companies that are the subject of an investigation or intervention are guaranteed the utmost legal protection. The Authority is thus bound by strict procedural rules, whereby, for example, an initial assessment in a case is thoroughly presented to the parties and they are given the opportunity to present their views and explanations before a decision is made.
At all stages of the proceedings, and after a decision by the Competition Authority has been made, companies have the option to challenge the legality of the investigation or the Authority's decision before the Competition Appeals Board and/or the courts. Businesses have done so extensively. Before the appeals board, nearly 85% of the Competition Authority's decisions have been confirmed in whole or in part, or the claims have been dismissed. These proportions indicate that the authority's decisions have, for the most part, been upheld, while at the same time the authority has tested the development of competition law.
The courts have also played a significant part in establishing the application of competition law in this country, for example, recent judgments of the Supreme Court of Iceland concerning Byko's breach of consultation and because abuse of the Milk Marketing Board in a dominant market position.
Both the EFTA Surveillance Authority and the EFTA Court then ensure that the Competition Authority's application of the EEA Agreement's competition rules in this country is in order.
There is therefore no substance in the unfounded criticism that company executives are left exposed to the decisions of the Competition Authority, or that they are unfair and capricious, as is sometimes claimed when no other arguments are available. The Competition Authority simply has no room for such conduct.
The interests of businesses and consumers harmed by barriers to competition
In a recent survey, commissioned by the Competition Authority from over 8,000 managers of Icelandic companies, it was revealed that around a third of the managers surveyed believe they are aware of competition law breaches in their market. Thus, 35% of managers believe they are aware of the abuse of a dominant market position, and 28% believe they are aware of illegal collusion in their market (see more Report of the Competition Authority No. 3/2020).
These findings are a matter of serious concern, as such breaches of competition law are liable to cause significant harm to the public. They also shed light on the enormous interest that new and smaller companies have in the competition authorities stopping breaches of competition law and other barriers to competition. The interests of this group of companies have been far too little discussed in the pages of the business press recently.
This group of companies, who want the Competition Authority to remove barriers to competition, often feel that the authority could do better and more. Such criticism is often valid. The reality is that the Competition Authority often has to prioritise complaints and reject or postpone their handling.
It should be mentioned that on 3 February, the supervisory authority published notification on its website, where it reports that a growing number of merger cases and cases related to the response to COVID-19 must be prioritised. Consequently, delays can be expected in other cases and in the reassessment of the grounds for investigations.
This situation is regrettable. However, this does not change the fact that the Competition Authority wishes to continue to maintain good relations with companies that experience barriers to competition in their operations. There are numerous examples where contact with such companies has led to important improvements. It was, for example, smaller competitors who enabled the Competition Authority to halt the competition law infringements in the building products and dairy markets, which have been confirmed by the Supreme Court in recent weeks.
It is therefore crucial that companies in this position continue to alert the Competition Authority to potential breaches of competition law. In this regard, it is urgent that they see through the objections of vested interests who wish to create the impression that contact with the regulator is to be avoided.
In this regard, the Competition Authority intends to establish a stronger dialogue with company management on ways to make it easier for them to raise suggestions and complaints and to receive a satisfactory resolution.
The participation of the supervisory authority in public debate is important.
The Competition Authority has also been criticised for taking part in discussions on competition matters, whether it be participation in discussions on the drafting of competition law, discussions about criticism of the authority, or otherwise.
This is an easy question to answer. The Competition Act simply places on the regulator the duties of advocating the Act's objectives, pointing out ways for the government to increase competition in markets, and reporting on its activities. Such an advocacy role has parallels with the foreign sister organisations of the Competition Authority and is in line with the recommendations of international organisations.
With this in mind, the Competition Authority often responds to criticism of its handling or decisions in individual cases by publishing notices on its website providing information about the relevant investigation or intervention. If criticism is not based on facts or is a misinterpretation of competition law and the Competition Authority's regulations, it can have a detrimental effect on competition and on the decisions of businesses and consumers. For example Some announcements of this kind recently. In the same way, the supervisory authority directs comments and opinions to the government and publishes them on its website.
The Competition Authority wishes to promote an informed discussion on the matter in question and the public interest related to it. At the same time, the Competition Authority wishes to continue to strengthen its relationships and dialogue with businesses, consumers and the government.
Finally, interested parties are referred to the Competition Authority's website for detailed information on its activities and decisions., www.samkeppni.is.
Páll Gunnar Pálsson
Director-General of the Competition Authority
"*" indicates required fields
