In its decision today, the Competition Authority concludes that the ownership of Hitaveita Suðurnesja (HS) by Orkuveita Reykjavíkur (OR) (HS), a strong competitor, would have a detrimental effect on competition and orders that OR sells a portion of its stake so that the company owns no more than 31% of the total share capital in HS.
OR has entered into agreements which result in the company being able to acquire a stake of just over 30% in HS. Furthermore, a shareholders' agreement has been entered into which strengthens the influence OR can have in HS. Taken together, these transactions give OR the ability to have a significant, long-term influence over the management and operations of HS, in contravention of Article 10 of the Competition Act.
The background to the matter is that the Icelandic state sold its stake in HS. The terms of the sale stipulated that publicly owned Icelandic energy companies were not permitted to bid for the state's stake, and this was done to protect competition. Following the sale, there was a significant shift in the company's ownership. Thus, OR, one of the Heat Company's main competitors, acquired around 15% of the company's shares. OR was also obliged to purchase the municipality's approximately 15% stake if the municipality so chose. The Competition Authority took the transaction under review, but plans for the merger of Reykjavík Energy Invest (REI), a subsidiary of OR, and Geysir Green Energy affected the progress of the investigation.
Decision No. 23/2008.
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