Last March, the Competition Authority concluded that Vífilfell hf. had breached the prohibition clauses of the Competition Act by abusing its dominant position in the soft drinks market. These were numerous contracts between Vífilfell and its customers (restaurants and shops) which contained illegal provisions regarding exclusive purchasing, conditional discounts and other security provisions. Exclusive purchasing in this context refers to agreements whereby Vífilfell bound its customers to purchase soft drinks exclusively from the company, and such agreements are unlawful when a dominant undertaking is involved.
Vífilfell appealed the decision of the Competition Authority to the Competition Appeals Board, demanding that it be annulled. The company made various observations on both the substance of the Competition Authority's decision and its procedure. The company argued that it had been wrongly deemed to have a dominant position in the market and that its agreements could not constitute an infringement. Furthermore, the company's right to be heard had been breached and the Competition Authority's investigation had been flawed.
Appeals Committeedid not accept Vífilfell's argument that fizzy drinks belong to the same market as t.d. milk drinks, juices or other non-alcoholic drinks, and the Commission confirmed, inter alia by reference to an approximately 70% market share in the soft drinks market, the conclusion of the Competition Authority that Vífilfell was dominant. The Committee also confirmed the finding that Vífilfell had abused its dominant market position. The Committee pointed out that exclusive purchasing agreements by a dominant undertaking were likely to exclude or significantly restrict competition from smaller or new competitors.
In its ruling, the appeals board stated that it considered Vífilfell's infringement to be serious. The Competition Authority had considered it appropriate to impose a 260 million króna fine on Vífilfell, citing the scale of the infringement, which involved almost 900 illegal agreements. The Appeals Board, however, reduced the fine to 80 million krónur. In support of this, the Board pointed out that it was important to „consistency and coherence, as far as possible, between decisions on competition law infringements. Particular regard is therefore paid to the decisions of the Appeals Board in cases concerning the abuse of a dominant position in recent quarters.“
See the decision of the appeal board for further details. No. 3/2011.
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