Measures aimed at more effective competition in the fuel market

The Competition Authority has published Report No. 2/2020 , Changes to the fuel market – addressing the barriers to competition identified in the Competition Authority's market study. The report reviews the barriers to competition that were discussed in Initial assessment report on the supervisory authority's market study, published at the end of 2015 (2/2015) , and an account is given of the changes that have occurred as a result of, or in connection with, that research.

Since the Competition Authority presented its preliminary assessment and suggested ways to remedy the situation, it has issued four opinions to the government, recommending measures to address conditions that are detrimental to competition. Furthermore, companies in the market have taken and committed to changes in connection with subsequent administrative proceedings, in line with the Authority's preliminary assessments in those cases, which are aimed at facilitating competition. In this regard, the following opinions, decisions and settlements may be mentioned:

1. Opinions No. 1/2017 and 2/2017 – Restrictive practices in the fuel market, in which recommendations were made to the Minister of the Environment and Natural Resources and the City of Reykjavík to improve the framework for planning and land allocation. The recommendations have not been acted upon.
2. Opinions No. 3/2017 and 4/2017 – Restrictions on competition in the fuel market, in which recommendations were made to the Minister of Transport and Local Government and the Transport Equalisation Fund to amend the fund's framework. The recommendations were acted upon.
3. Decision No. 8/2019, Merger of N1 hf. and Festi hf, where the merging parties committed themselves m.a. the sale of petrol stations in the capital region and the 'Dælan' trademark to a new party, and changes to the framework for fuel procurement and distribution, both of which are intended to enhance competition.
4. Decision No. 9/2019, Merger of Haga hf., of Haga hf., Olíuverzlunar Íslands hf. and DGV ehf., in which the merging parties undertook, among other things, the sale of petrol stations in the capital region to a new party and changes to the framework for fuel storage and distribution.
5. Settlement of Olíudreifing (ODR) with the Competition Authority regarding increased access for resellers to wholesale fuel and increased access to the services of Olíudreifing ehf. The settlement was made in connection with the resolution under points c and d above.
6. Decision No. 39/2020, Improved competitive conditions for the sale of aviation fuel at domestic airports, where a settlement for the case ensures equal and objective access to the sale of fuel at domestic airports.

It has now been ensured that there is fair and objective access to the facilities of Icelandic Tank Storage ehf. in Helguvík for the sale of aviation fuel. These solutions are discussed in more detail in the report.

In light of the above, there have been significant changes in the fuel market since the market study was conducted. These changes are likely to facilitate competition in the market, although it is not yet clear what their ultimate impact will be. In the opinion of the Competition Authority, these reforms are likely to facilitate the development of energy markets and create a more efficient framework for the forthcoming energy transition. In this area, there are various challenges that the Competition Authority is considering.

 During the market investigation, it was not necessary to apply intervention pursuant to subsection 1(c) of Article 16 of the Competition Act, which authorises the Competition Authority to intervene in situations that hinder competition, even if they are not attributable to breaches of competition law. It is positive that changes have occurred in the market without it being necessary to resort to that provision.

Here you can read more about a market research study on the fuel market.