In July, the Competition Authority reached the conclusion in a decision No. 23/2011 that Landsbanki Íslands hf. (LÍ (the old Landsbanki)) had breached the prohibition in competition law against implementing a merger before it has been authorised by the competition authority.
LÍ's infringement consisted of taking over six companies, which were previously owned by Bergeyjar eignarhaldsfélags ehf., and selling all of them, with one exception, 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.
LÍ appealed to the Appeals Board, demanding that the Competition Authority's decision be overturned, as the bank had not had control over these companies and had therefore not breached competition law. Furthermore, the Competition Authority's decision was unreasonable and violated the principle of proportionality in administrative law.
In a ruling published yesterday, the Competition Appeals Board concluded that LÍ had breached clear provisions of the Competition Act by failing to notify the acquisition of Bergey's subsidiaries. The Competition Authority had considered it appropriate to impose a 40 million króna fine on LÍ, but the appeals board considers that a reasonable fine is 7.5 million króna. The board does not agree that it was correct to take LÍ's interest income into account when assessing the fine, and believes that the bank's financial strength is not significant. The committee also took a fine in a previous case into consideration.
Background information
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:
The purchase agreements for LÍ's takeover of the companies were 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. Íslandic Car Rental 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.
See the decision of the appeal board for further details. No. 6/2011.
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