Competition law prohibits a merger from being implemented while the Competition Authority is reviewing it, unless a special authorisation is granted by the Competition Authority. Furthermore, mergers must be notified to the authority. This rule is intended to ensure that the merger provisions of the Competition Act achieve their objective. The Competition Act specifically provides for penalties to be imposed on companies that breach this rule.
LÍ's infringement consisted of taking over six companies, which were previously owned by Bergeyjar eignarhaldsfélags ehf., and selling all but one of the companies to a third party. LÍ did this before he notified the Competition Authority of his acquisitions of the companies and of their sale. LÍ therefore breached the obligation to notify a merger under competition law and the prohibition on carrying out a merger before the Competition Authority has examined it. This took place in 2009 and 2010. The Competition Authority became aware of these transactions in 2010.
Taking into account, among other things, the scale and nature of the infringements, the Competition Authority considers it appropriate to fine LÍ 40 million.
In its report of 9 June, Competition after the crash, the Competition Authority reports that the financial restructuring of indebted companies is proceeding too slowly and could have a detrimental effect on competition and business activity. To speed up this process, it is necessary, among other things, that financial institutions and other parties comply with the provisions of competition law.
In April 2009, an agreement was made between LÍ, Magnús Kristinsson, Smáeyja ehf. and related companies, which involved LÍ taking over the shares of Bergeyjar eignarhaldsfélag ehf. in certain companies. Bergey eignarhaldsfélag ehf. was then wholly owned by Smáeyjar ehf. Under the agreement, LÍ took over shares in the following companies:
A purchase agreement for the takeover of the companies by LÍ was then entered into on 1 July 2009. According to LÍ, the takeover was part of enforcement proceedings against the aforementioned parties. The companies M. Kristinsson ehf., Sólning Kópavogi ehf. and Bergey fasteignafélag ehf. were then all sold to the holding company Bifreiðar ehf. on 4 August 2009. On the same day, LÍ also sold the company Pizza Pizza ehf. to the holding company Pizzasmiðjunnar ehf. Bílaleiga Flugleiða was then sold to the company Norðurlöndin ehf. on 26 February 2010. LÍ's notification to the Competition Authority of the takeover of the subsidiaries of Bergeyjar eignarhaldsfélag ehf. is dated 16 June 2010.
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