In a new decision by the Competition Authority No. 20/2006 Skífan (now Dagur Group) was found guilty of abusing its dominant market position, thereby breaching the prohibition clauses of the Competition Act. Skífan did this by entering into agreements with Hagkaup for the sale of CDs and computer games, in 2003 and 2004 respectively, both of which involved so-called exclusive purchases and anti-competitive discounts. Exclusivity agreements in this context mean that Hagkaup undertook to purchase, wholesale, a specified high proportion of all the relevant products exclusively from Skífan. The agreements effectively excluded Skífu's competitors in the wholesale of the specified products from doing business with Hagkaup, which is a major retailer of, among other things, compact discs.
In December 2001, the Competition Council concluded that Skífan had abused its dominant market position by entering into a sole-purchase agreement with the company Aðföng for the sale of music on compact discs in Hagkaup and Bónus stores. In a 2004 Supreme Court judgment, it was confirmed that Skífan had breached competition law with the aforementioned agreement and that the company was to pay a 12 million króna fine.
In mid-2004, the competition authority made a decision regarding the merger of, among others, Skífan and the BT stores. It states, among other things, that Skífan's wholesale division would be prohibited from requiring its customers to purchase a specified proportion of their product selection in individual entertainment media categories from Skífan's wholesale division.
By entering into the agreements with Hagkaup which are the subject of the decision now taken by the Competition Authority, Skífan repeated its infringement of competition law as dealt with in the Competition Council's decision from 2001 and the Supreme Court judgment from 2004. The agreements from 2003 and 2004, which have now been ruled upon, are even more extensive and cover more product categories than the agreement that had previously been ruled illegal. Skífan also breached the 2004 merger decision when the company entered into the later agreement with Hagkaup.
The Competition Authority considers Skífan's infringement to be serious. It is therefore deemed appropriate for Skífan (now Dagur Group) to pay a statutory fine of 65 million krónur to the state treasury. The Competition Authority's decision in this case can be found on the authority's website.
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