Festi Ltd. admits guilt and pays a fine

With
decision
The Competition Watchdog, published today, outlines a settlement which
The supervisory authority has reached an agreement with Festi hf. In the settlement, the company otherwise acknowledges
on the one hand, a breach of the obligations in an earlier agreement made when N1 and Festi merged, and on the other hand, a breach of
provisions of competition law on the provision of information during an investigation by the Competition Authority in
same merger case. The company agrees to
pay a 750 million króna fine for these breaches which the Competition Authority
considers serious.

The background to this case is that at the end of July 2018,
The Competition Authority is investigating merger which consisted of
in the purchase by Festi (then called N1 hf.) of the company that, among other things, owned and operated
grocery stores. The Competition Authority came to the conclusion that the merger
would, if left unchanged, distort competition. Festi, however, offered a variety of
conditions to prevent the competitive problems and thus avert
annulment by the Competition Authority.

The merger deal was concluded when Festi signed on 30 July.
2018 agreement whereas
The company committed to complying with various conditions in order to protect
competition in the grocery and fuel markets. On the recommendation of Festi, a commission was appointed
special supervisory officer („independent skilled person“) in order to ensure
that the company would comply with these conditions.

The Competition Authority launched an investigation into possible breaches of the settlement.
following the independent expert having, in accordance with his role,
draw attention to possible breaches, as well as the market participants had
Submit complaints and suggestions. Is this investigation now complete with
Confirmation of attachment of costs to fines and payment of fines.

The Broken

Violations of the agreement are serious, in the opinion of
of the Competition Authority. They went against the objectives and substance of the settlement of 30th.
July 2018, which was intended to avert the merger in question from disrupting
Competition. Breach of the company's obligations under the 2018 settlement.
are, more specifically, as follows:

• A breach of conditions that were intended to protect and promote competition
  fuel market, and were put in place to ensure access to fuel in
  wholesale and the arrival of a new competitor, including in place of competition from a previous owner
  The Crown had prepared;
• A breach of a condition intended to protect and promote competition on
  grocery market due to market concentration and the integration of groceries and
  fuel attributable to the merger;
• A breach of a condition concerning a review of the partnership and
  agreement with a competitor in the grocery market;
•  Breach of duty of Festi to provide an independent expert
  necessary information and assistance, and thereby hindered him in his supervision.

Attach
has also admitted to breaching the provisions of competition law on the duty to provide information
in connection with the Competition Authority's 2018 investigation into the aforementioned merger.
The breaches consisted, in this respect, of Festi's failure to provide in a timely manner
necessary and sufficient data on a possible entry into the fuel market and the other
concerning the failure to provide the Competition Authority with adequate information
the company's views in the making of the settlement of 30 July 2018. In the opinion of
These breaches were also serious for the Competition Authority.

About fines

Regarding the Festi fine, the Competition Authority has taken this into account.
in the decision of the Competition Appeals Board in case no. 5/2011, Forlagið Ltd.
against the Competition Authority, it was noted that „Very urgent“ is to
company „value conditions for mergers and that it can be trusted that agreements in
that such matters are more than just empty words. Therefore, sanctions must have
Real deterrent effect.The appeal board also pointed out that it is
It is important that the parties to merger cases take„seriously the conditions that were set
are in favour of mergers, not least in light of the fact that they themselves take part in the shaping
the conditions and then assess their interests based on them. It is therefore extremely
It is important that companies abide by the terms to which they agree in settlements.
with the Competition Authority. Companies that voluntarily agree to such conditions should
They hold them in high regard and make a special effort to ensure their objectives are achieved.

Also
It is important that the merging parties provide the Competition Authority with accurate and
Sufficient information in
in its dealings with the Competition Authority during an investigation into merger cases. Otherwise, it has
seriously undermined the effective investigation of competitive effects
mergers. Because of this, urged
The National Audit Office The Competition Authority in a report from July 2022 to
to take targeted action regarding misleading and incorrect information in
merger cases. Would the supervisory authority„that
respond firmly and remove any doubt that government fines will be imposed
deliberately misleading or incorrect information.“

The Competition Authority
has also taken into account that Festi, of its own initiative, requested
conciliation talks and have clearly acknowledged the aforementioned breaches. With this
has Festi facilitated and shortened the investigation and proceedings of the competition authorities which
has a positive competitive effect. This leads to lower fines than would otherwise be the case.

Thought
The Competition Authority considers it appropriate that Festi paid 750,000,000.
a fine for administrative offences, and the company has agreed to this.