The Competition Authority has published
decision to annul the purchase of Búvís ehf. by Skeljungur ehf. Skeljungur is owned by
SKEL Investment Company Ltd. operates in diverse sectors of Icelandic business life.
and supplies farmers with inputs, including fertiliser. Búvís specialises in sales
Supply of goods and equipment to farmers, including the sale of fertiliser.
The Competition Authority's investigation
has revealed that Búvís is an important competitor in the market for
import and sale of fertiliser and that the merger would, all else being equal, have
significant harmful effects on that market. It is therefore inevitable to annul
the merger.
Fertiliser is an important input in
agriculture and a major cost item for farmers. Previous research
Competition authorities indicate that the bargaining position of farmers vis-à-vis parties
is weak, in addition to the financial situation
Being a farmer is generally hard.
The evidence shows that Búvís was
established in response to significant price increases in fertiliser and a lack of competition.
Reviews from farmers, which were obtained in the case, also show that Búvís has changed
to improve the competitive situation, we must keep costs down and improve service and
Commercial terms for farmers. There is a risk that market conditions would revert to their previous state.
would have resulted from the merger.
Búvís and Skeljungur are close
competitors in the sale of fertiliser. Then Búvís is a strong competitor that provides others
compete with companies beyond what its market share indicates. With
The takeover of Skeljungur would therefore have eliminated that important and powerful competitive force.
restraint from Búvís.
If Skeljung's takeover of Búvís
Had it succeeded, the number of viable competitors would have been reduced from four to three.
Significant concentration would have occurred in a monopolistic market, beyond what is acceptable.
in accordance with recognised standards of competition law.
In addition to this, a reduction
the competitors in the relevant market of the case the consequences that the circumstances would have become
more convenient for coordination, such as in price-setting, for farmers and consumers
loss.
Then the merger parties have not laid
provided sufficient information, data or explanations, to the effect that the merger has
entailing an improvement or economic progress as a counterbalance to harmful
The effects of the merger.
During the proceedings, the parties have
The merger parties have neither requested conciliation nor submitted proposals for
possible conditions. Then the merging parties have not exercised the authority of competition law to
its request for an extension of the deadlines in the case, in order to create room for
Further investigation.
A more detailed summary, as well as coverage of the merger,
The investigation by the regulator, the proceedings, and the harmful effects of the merger, can be found in
Published decision of the Competition Authority here .
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