Control of Bláfugl ehf. by Íslandsbanki hf. and Glitnir banki hf. subject to conditions

The Competition Authority has, by decision No. 8/2011 Conditions have been set on the takeover of Bluebird by Íslandsbanki and Glitnir. Bluebird is a cargo airline that has been under the control of the Icelandair Group. It will now come under the control of the holding company SPW, which has been jointly established by Íslandsbanki and Glitnir.

The conditions that the Competition Authority has imposed on the takeover of Bláfugl by Íslandsbanki and Glitnir are aimed at accelerating the sale of the company and otherwise mitigating the distortion of competition that may arise from the banks' ownership of the company.  Icelandic bank and Glitnir have signed an agreement on the matter and agreed to comply with the conditions. The main conditions are as follows:

• The Bluebird is to be sold within a specified timeframe. The sale period is confidential, as such deadlines, if made public, could have an undue effect on the sales process and the sale price.
• Full independence must be ensured between, on the one hand, Bláfugl and, on the other hand, Bláfugl's competitors in which Íslandsbanki or Glitnir own, or may come to own, shares. This includes, amongst other things, independence from Bluebird's competitor, Icelandair Cargo, in which Íslandsbanki has an interest due to its shareholding in the Icelandair Group.
• In addition, various conditions are imposed to ensure that Bláfugl otherwise operates as an independent competitor in the market and competes on a fair basis. Among other things, the company shall be subject to normal profitability requirements, and Íslandsbanki is prohibited from interfering with Bluebird's dealings with the bank's customers or other companies in which the bank or Glitnir hold a stake.

Recommendations of the Competition Authority

In 2005, the competition authorities approved FL Group's acquisition of Bluebird with certain conditions. In a report by the Competition Authority No. 2/2008, 'Robust development – opening up markets and boosting business activity', the competition conditions in freight transport to and from Iceland were discussed in particular. It was concluded that the key assumptions on which the merger was approved would not have been realised. With reference to this, the Competition Authority directed the Icelandair Group to sell Bluebird to an unrelated party. The authority considered that this would establish more effective competition in the market for the benefit of consumers.

The takeover of Bláfugl by Íslandsbanki and Glitnir, which at the same time leaves the Icelandair Group, along with plans to sell the company, is in accordance with the aforementioned recommendations of the Competition Authority.