Last October, the Competition Authority made a decision regarding the merger of Vestia hf. (a subsidiary of NBI Bank, i.e. Landsbankinn) and Teymi hf. (the parent company of, for example, Vodafone). It was not considered to be an authorisation under competition law to intervene in the merger, as there was no overlap in competition between these companies. Furthermore, no objection was raised in the case regarding Teymis's financial restructuring. The merger provisions of the Competition Act allow the Competition Authority to annul or impose conditions on a merger when it is proven to distort competition.
Síminn hf. appealed the aforementioned decision of the Competition Authority to the Competition Appeals Board. Síminn argued that as Teymi had become the property of a subsidiary of NBI hf. and the company's debts had been written off, this resulted in Teymi and its subsidiaries being in a dominant market position in the telecommunications and information technology markets. Consequently, the merger significantly impaired competition. The Telephone Company demanded that the merger in question be annulled or made subject to conditions.
In a ruling published on 22 January, the appeals board upheld the Competition Authority's conclusion that there was no legal basis to annul the merger. The appeal board also considered that „competition law must not limit the ability of companies to restructure financially through agreements with creditors, when debts are crippling their operations to the extent that they would otherwise go bankrupt.“ It was not accepted that the merger resulted in Teymis holding a dominant market position.
The Competition Appeal Tribunal, however, held that competitive problems can arise from a bank's long-term ownership of businesses. The exceptional circumstances that now prevail provide a basis under competition law to impose conditions on banks' takeovers of companies in unrelated sectors, so that the acquired companies can operate as independently as possible from the banks. The banks will then sell the companies within a reasonable timeframe. On this basis, the decision of the Competition Authority was overturned. This ruling means that the Competition Authority will reconsider the merger of Vestia hf. and Teymi.
On 8 December 2009, the Competition Authority published a discussion paper on banks and the financial restructuring of companies. It addresses competition-related issues, including, inter alia, bank ownership of companies that have fallen into debt trouble. The aforementioned decision of the Appeal Board is important in this context. The Board's interpretation means that the powers under competition law to intervene in mergers in a binding manner are broader than the Competition Authority had previously considered. The Authority thus has increased powers to address the competitive problems associated with the ownership of the banks, as described in the discussion paper of 8 December.
See the decision of the Competition Appeals Board for further details. No. 19/2009.
"*" indicates required fields
