On 8th April, the Competition Authority came to the conclusion that conclusion that Vélar og verkfæri ehf. had abused its dominant market position in the sale of material for the production of master key systems. The company did this by preventing service providers for master key systems from importing and selling master key systems from manufacturers other than ASSA in Sweden, and by hindering other foreign manufacturers from gaining a foothold in the Icelandic market. The company's infringement was considered serious and is believed to have affected the sale of ready-made master key systems directly to consumers. As a result of this infringement, Vélum og Verkfærum was ordered to pay a statutory fine of 15,000,000 kr.
Vélar og Verkfæri appealed the Competition Authority's decision to the Competition Appeals Board, demanding that it be overturned or the fines significantly reduced. The company, among other things, made observations regarding the definition of the relevant markets in the case, its position in the market, and its alleged abuse of a dominant market position.
In a ruling of the Competition Appeal Tribunal, published today, confirms the Competition Authority's finding that Vélar og Verkfæri is in a dominant market position and that the exclusive purchasing agreements involved constituted an abuse of that position, in that they were likely to exclude competition and were in breach of Article 11 of the Competition Act.
The Appeal Board, however, considered the Competition Authority's definition that the sale of materials for the production of master key systems belonged to a specific market to be too narrow, but agreed with the Authority's argument that master key systems belonged to a specific market and that there was no substitute between that market and other access systems to such an extent that it could affect the market definition. The Appeal Board also noted that Vélar og Verkfæri had been the only party to import materials for the production of master key systems since 2002. All other sellers in the market were dependent on the company for the supply of materials and, therefore, for the system itself. Although there were indications that it would be possible to enter the market without significant difficulty, it had to be considered that the economic strength of Machinery and Tools was considerable and that the defined market involved only relatively low sums of money per year. Therefore, there would be little incentive for new entrants to enter the market.
The Competition Appeals Board considered it appropriate to reduce the fine imposed on Véla og Verkfæra to 10,000,000 kr. In this regard, it was noted that it was right to take into account the size of the relevant market and the interests associated with it.
See the decision of the Competition Appeals Board for further details. No. 9/2009.
"*" indicates required fields
