Recently, there has been a great deal of discussion about food prices and, in that context, competition and the competitive conditions in the food market. For this reason, and in the interest of monitoring competition in the food market, the Competition Authority considers it appropriate to provide information on the investigations currently underway and on the Authority's actions in recent months concerning the food market. Furthermore, the Competition Authority calls upon companies and individuals to assist by reporting any anti-competitive practices that may constitute breaches of competition law, thereby providing the market with the necessary oversight.
Observations in progress
The following investigations are currently underway by the Competition Authority:
- In mid-last year, the Competition Authority launched an investigation into certain aspects of the retail market. The main objective of that investigation is to assess the position of individual companies in the market, to analyse how parties may be abusing a dominant position in it, and to examine, among other things, whether there has been harmful below-cost pricing in certain areas. Furthermore, information has been obtained from retailers regarding the terms of their contracts with suppliers. Extensive data has been collected for this investigation, which is well advanced. It is not known when it will be completed.
- An investigation into the commercial agreements of suppliers and resellers, such as food retailers and restaurants, has been launched. Data is being collected from around 70 suppliers. Information is being gathered, among other things, on wholesale price trends, including the price increases made by suppliers in recent weeks.
- Import protection on agricultural products is under review by the Competition Authority. Among other things, it is being considered whether there is a reason to issue an opinion to the Minister of Agriculture regarding import protection on agricultural products. Furthermore, previous opinions from the Competition Authority to the Minister of Agriculture regarding the competitive conditions in agriculture are being followed up.
- In addition to the above, the Competition Authority is handling submissions and comments concerning the food market, in particular the competitive conditions in the production and sale of dairy products.
Actions in recent semesters
The Competition Authority has focused on the food market in its supervision in recent quarters. The following may be mentioned in this regard:
- The Competition Authority participated in the production of a report by the Nordic competition authorities on the food market, which was published at the end of 2005. The report revealed significant price differences for food products in Iceland compared to most of the other Nordic countries. The Competition Authority followed up the aforementioned report with a more detailed presentation, as the report prompted extensive debate about food prices and the competitive conditions in the food market.
- Simultaneously with the Competition Authority presenting the findings of the Nordic report, it presented its priorities in this area. The authority's website contains a press release on this matter, and an annex to it provides a detailed discussion of the competitive conditions in Iceland (see www.samkeppni.is, under reports, speeches and presentations).
- The above discussion was followed by numerous meetings with participants and stakeholders in the food market. The information obtained there was then used to shape the Competition Authority's more detailed priorities.
- In December 2005, the Competition Authority issued an opinion to the Minister of Agriculture, concluding that a public subsidy to dairy producers in the form of direct payments discriminates against beef producers, but that the support benefits those beef producers who also engage in dairy production. The provision of support therefore contravenes the objective of the Competition Act. The Competition Authority recommended to the Minister of Agriculture that he take steps to level the playing field. The opinion, No. 1/2005, is published on the supervisory authority's website.
- In October 2006, the Competition Authority concluded that the Cheese and Butter Company had abused its dominant market position towards Mjólka Ltd. when it sold milk powder to the company at a different and higher price than to another cheese-producing company. This decision was upheld by the Competition Appeals Board in December. See the decision of the Competition Authority for further details. No. 39/2006 and the decision of the appeal board No. 8/2006.
- In connection with this matter, the Competition Authority issued an opinion to the Minister of Agriculture, recommending that he promote changes to provisions of the Agricultural Produce Act that hinder competition and discriminate against companies in the dairy industry. Particular reference was made to the harmful effects of provisions in the Agricultural Produce Act which permit dairy processing plants to consult with each other and merge in contravention of competition law. Furthermore, the Minister was urged to push for the abolition of tariffs on milk powder in order to facilitate competition in the dairy industry. See the Competition Authority's opinion for further details. No. 1/2006.
Companies and individuals can assist the Competition Authority.
The Competition Authority encourages companies and individuals involved in the production, distribution or sale of food products to send the Competition Authority tips about possible breaches of competition law.
Competition law prohibits all forms of anti-competitive collusion and the abuse of a dominant market position. Offences under competition law can be carried out in secret and cause significant damage to the public and the business community. It is therefore vital for the Competition Authority to receive information about when companies engage in illegal collusion, for example on prices or the division of markets. It is also important to inform the Competition Authority when a dominant undertaking abuses its position, for example, by imposing unfair trading conditions or discriminating between customers.
Tips from businesses or individuals about possible breaches of competition law can be decisive in the success of food market surveillance. On the Competition Authority's website www.samkeppni.is, you can submit tips about this. It is possible to send such tips anonymously. Furthermore, it contains information on how companies that have committed infringements can have fines for anti-competitive conduct cancelled or reduced, by providing information about the infringement and cooperating with the Competition Authority in the investigation of the case.
Further information on the website of the Competition Authority can be found about what types of conduct may constitute an infringement of competition law. It should be noted that the Competition Authority does not conduct price monitoring or price surveys.
