District court confirms that Skífan has breached competition law

In the decision of the Competition Authority of 16 June 2006 No. 20/2006 Skífan was found guilty of having abused its dominant market position and thus breached the prohibition clauses of the Competition Act. Skífan did this by entering into unlawful agreements with Hagkaup concerning the sale of CDs and computer games, in 2003 and 2004 respectively, both of which involved exclusive purchasing arrangements and restrictive discounts. Exclusive purchasing in this context refers to Hagkaup's commitment to purchase a specified, high proportion of all the relevant products exclusively from Skífan. The agreements effectively excluded Skífan's competitors in the wholesale of the specified products from doing business with Hagkaup, a major retailer of, among other things, compact discs. This constituted a repeated breach by Skífan of competition law. The Skífan's previous infringement was addressed in a competition council decision from 2001 and a Supreme Court judgment from 2004. Skífan's breach of competition law for which it is now being sentenced was more extensive than the company's previous infringement. In its decision, the Competition Authority ordered Degi Group ehf. (formerly Skífan) to pay an administrative fine of 65 million króna.

Dagur Group ehf. (formerly Skífan, now Árdegi ehf.) appealed this case to the Competition Appeals Board, which issued its own ruling. No. 4/2006 on 22 September 2006. In its ruling, the Appeal Board upheld the decision of the Competition Authority. The panel considered that Skífan's infringement was both obvious and serious, and that the company's representatives must have been aware that the agreements in question contravened competition law and the Competition Council's decision from 2001. The Competition Authority's decision on the amount of the administrative fines was also confirmed.

Árdegi then brought a case before the Reykjavík District Court, demanding that the decision of the Competition Appeals Board be annulled, or that the administrative fine be quashed or significantly reduced. In its judgment today, the District Court rejected Árdegi's claims. The court found that competition law had been breached and that the imposed fine was in line with the seriousness of the infringements.

Verdict District Court.