Supreme Court ruling leads to higher machinery and equipment fines

In April 2009, the Competition Authority reached the conclusion in a decision No. 14/2009 that Vélar og verkfæri ehf. had abused its dominant market position in the sale of material for the production of master key systems.  The company did this, among other things, by preventing service providers of master key systems from importing and selling such systems from manufacturers other than ASSA in Sweden. The company's infringement was considered serious and affected the sale of ready-made master key systems directly to consumers. Master key systems are access control systems for buildings, consisting of various locks and keys for a specific property, where one master key is, however, present that works on all the locks. The Competition Authority imposed a fine of 15 million króna on Vélar og verkfæri, which was a significant amount relative to the turnover in the relevant market.

Machines and Tools appealed the decision of the Competition Authority to the Competition Appeals Board, which in July 2009 upheld the finding of an infringement but reduced the fine to 10 million kr. In its ruling, the appeal board agreed with the Competition Authority that Vélar og verkfæri was dominant in the market, but considered the authority's market definition to be too narrow and adopted an alternative definition. In December 2010, the Reykjavík District Court upheld the decision of the appeals board.

Machines and Tools appealed the case to the Supreme Court, which delivered its judgment yesterday. The Supreme Court overturned the appeal board's ruling, finding that the board's decision to change the Competition Authority's definition of the relevant market had not been sufficiently justified and that the investigation was inadequate. This Supreme Court ruling means that the Competition Authority's finding of an infringement by Uni Machines and Tools stands, and the company must therefore pay a fine of 15 million króna instead of 10 million. If Uni Vélar og verkfæri does not accept that decision, the company can once again appeal to the appeals board.