The Competition Authority annuls the merger of Dagsbrún hf. and Sena ehf.

By decision No. 22/2006 As of 27 June, the Competition Authority has annulled Dagsbrún's acquisition of Sena, as the purchase constitutes a merger of the companies within the meaning of competition law.

The merger was notified to the Competition Authority at the end of February and the authority has since been working on an investigation into it and its competitive effects. Sena and companies owned by Sena operate in various areas of entertainment such as computer games, videos and music. According to the merger notification, Dagsbrún is a holding and investment company that invests mainly in the media, telecommunications, entertainment and related sectors.
 
The Competition Authority is of the opinion that Dagsbrún's acquisition of Sena strengthens the market-dominant position of both companies in various media and entertainment markets. The Competition Authority also believes that, by virtue of this position, the companies can limit competition and set their pricing, commercial terms and services without taking into account their competitors and consumers.

The Competition Authority therefore considers that Baugur Group hf. has control of Dagsbrún within the meaning of competition law, in light of its shareholding and its connections with other major shareholders in the company. In addition, Baugur controls Hagar hf. Sena and Hagar operate partly in related markets, namely primarily the wholesale and retail of music on CD, DVDs and computer games.  The competitive effects of these links were therefore also examined.

The Competition Authority considered whether the merger could be authorised with conditions and sought proposals from the merging parties to this effect. There were no grounds to approve the merger with conditions. In the opinion of the Competition Authority, the annulment of the merger between Dagsbrún and Sena was therefore the only viable way to avoid the harm to competition that would result from the merger in the markets where its effects would be felt.

Markets affected by the merger
The merger that has now been annulled would, in the opinion of the Competition Authority, have affected competition in the following markets:

• The subscription television market (365 broadcasters operating, for example, the television channels Stöð 2 and Sýn)
• The market for wholesale and retail distribution of music on CD (e.g. Sena and Hagkaup)
• The market for wholesale and retail distribution of music online (e.g. music.is)
• The market for wholesale and retail distribution of DVD films (e.g. Sena and Hagkaup)
• The market for wholesale and retail distribution of computer games (e.g. Sena and Hagkaup)
• The market for content acquisition (e.g. exclusive purchase agreements with producers of key television content and control over mobile content)
• The market for film screenings in cinemas (e.g. Smárabíó and Regnboginn).

Dagsbrún and Sena have a strong position in all these markets and a dominant position in several of them. In the markets for subscription television, content acquisition, wholesale of music on CD, wholesale and retail online music distribution, and wholesale distribution of computer games, the merger of Dagsbrún and Sena results in increased market dominance and is detrimental to competition, as previously stated.

For the reasons and arguments for the decision, reference is otherwise made to the decision of the Competition Authority. No. 22/2006.