The telephone company misused its dominant market position with the offer it made to users in the summer of 2009. „3G dongle and subscription for free all summer“. Síminn is to pay a government fine of 60 million króna.
The offer in question from Síminn involved new customers of its data transmission service, where a 3G dongle is used, being offered a free 3G dongle and a free subscription to the service for up to three months, in exchange for a six-month commitment. The telecommunications company Nova complained to the Competition Authority about the offer. The Competition Authority took interim decision dated 2 July 2009, whereby Símanum was prohibited from offering the said offer.
In the final decision, dated 16 September. No. 30/2011, the Competition Authority concludes that Síminn held a dominant market position in the relevant market. Furthermore, the Competition Authority concludes that Síminn abused that position by undercutting in the aforementioned offer. Undercutting essentially consists of a dominant undertaking selling a product or service below cost price.
Dominant undertakings are, however, permitted to meet competition vigorously, taking into account the economic circumstances at any given time, and the obligations of dominant undertakings do not extend to sparing competitors on the relevant market who are unable to withstand normal competition. However, dominant undertakings are prohibited from engaging in practices that constitute below-cost pricing. If a dominant undertaking meets competition with a price reduction that is not based on its operational performance, this can result in efficient companies, which do not have sufficient financial strength to withstand such a price war, are driven out of the market, thereby reducing competition. Even if consumers benefit in the short term from receiving a product or service at a very low price, an undue price cut by a dominant firm can cause a serious distortion of competition in the long term and thus harm the interests of consumers.
The misconduct of Síman consisted of actions that could not be considered normal competition within the meaning of competition law. Síman has been ordered to pay a government fine of 60 million krónur.
See the decision for details No. 30/2011.
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