By a decision on 11 July, the Competition Authority annulled the merger of DAC and Lyfjaver, retail and dose-service pharmaceutical companies, as the merger was deemed to distort competition and to be detrimental to the public interest. DAC is an affiliated company of the pharmaceutical retailer Lyf og heilsa. The merger would have had the effect that two pharmaceutical retail chains, Lyf og heilsa, on the one hand, and Lyfja, on the other, would have commanded in excess of 80% of the entire pharmaceutical retail sector in Iceland. The Competition Authority was of the opinion that Lyf og heilsa were sharing a collective dominant position with Lyfja in the pharmaceutical retail sector. The conclusion of the Competition Authority was that the collective market dominance of Lyf og heilsa and Lyfja enabled the companies to collude in the market without needing to take competitors or consumers into account. In the Authority's opinion, the companies were therefore in a position to restrict competition and raise prices. Had the merger in question taken place, this position would have become even more serious from the point of view of competition.
DAC and Lyf og heilsa appealed the decision of the Competition Authority to the Competition Appeals Committee, which returned its decision today. The Competition Appeals Committee stated that it had been demonstrated that the merger would distort competition and that the Competition Authority had therefore been correct in annulling it. The Committee therefore confirmed the decision of the Competition Authority.
The retail pharmaceutical sector has seen substantial concentration in recent years. The Competition Authority believes it is very significant that this merger was prevented and that the increased oligopoly in this important market was thereby deterred. Lyfjaver has been a strong competitor of the large pharmaceutical chains and focused on offering pharmaceutical products at low prices. The exit of Lyfjaver from the market would have resulted in a significant distortion of competition, which would have been detrimental to the interests of people who need to take medication. The Competition Authority also believes that the decision of the Competition Appeals Committee sets a significant precedent which will make it easier for the Competition Authority to prevent tendencies towards oligopoly in various markets in Iceland.
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