The Competition Authority advises the government to consider competition considerations in relation to planning matters and the allocation of plots of land.

There are examples where planning decisions and land allocations have distorted competition – it is necessary to take action to counter this.

The Competition Authority has today urged the Minister for the Environment to push for changes to the provisions of the Planning and Building Act to ensure that competition considerations are taken into account when planning and allocating plots of land.

Furthermore, the Competition Authority directs municipalities in Iceland to have eight main principles in mind when planning matters and allocating plots. These include, among other things, the following:

• That a competitive assessment is made of the organisation of neighbourhoods.
• The allocation of plots should be carried out by tender or other transparent means.
• That measures be taken, as far as possible, to ensure that new or smaller businesses receive plots of land for their commercial activities, and to prevent market-dominant companies from being able to hoard land.
• Local authorities should act against anti-competitive clauses in lease agreements.

These recommendations are set out in a special opinion, No. 3/2009, Planning, land allocation and competition.

It is clear that the legislature, local authorities or other authorities have not established a clear policy on the impact of competition considerations on the drawing-up and implementation of planning schemes and on individual local authority land allocations. Experience shows that the way planning matters and land allocations are handled can have a considerable impact on competitive conditions. The opinion refers, among other things, to a report by the Competition Authority. No. 2/2008, Robust development – opening markets and strengthening the economy, which contains a detailed discussion of planning cases in the food market, oil market and shipping market, which are believed to have involved a distortion of competition. General examples are then presented which show that competition considerations need to be given a greater role in planning and land allocation.

In the long term, it is essential, not least because of the economic crisis currently affecting Icelandic society, that the planning authorities push for changes to laws and regulations, and especially the procedures for planning matters and the allocation of plots of land. It is important for the promotion of effective competition in the future that these proposals receive a positive response from the planning authorities.

In the opinion of the Competition Authority, these guidelines can help ensure that geographical markets remain open and thus prevent unnecessary public barriers to entry. The guidelines are intended to promote a dynamic business environment in the long term and increase consumer benefits. This is particularly important during the economic recovery.

Background information
In the report of the Competition Authority No. 2/2008, A Strong Infrastructure – Market Opening and the Promotion of Economic Activity, published in November 2008, specifically addressed the importance of planning matters in individual chapters concerning the food market, the oil market and the maritime transport market.

Following the publication of the Competition Authority's report, the Ministry of the Environment, the Ministry of Transport, larger local authorities and other relevant parties were asked for their views. In addition, various local authorities were asked to answer specific questions about land allocations and planning matters. Comments were received from most of the parties that the Competition Authority has considered in preparing its opinion.

Under competition law, the Competition Authority is tasked with ensuring that the actions of public bodies do not restrict competition and with advising the government on ways to make competition more effective and to facilitate the entry of new competitors into the market. The Competition Authority does this, among other things, by issuing public opinions to the government.

See also Follow-up in 2016