At the end of 2009, the Competition Authority concluded that Síminn had breached conditions imposed on it by the competition council in a 2005 decision, thereby seriously distorting competition from smaller rivals. The case stems from a complaint filed with the Competition Authority by the company TSC. TSC is a small telecommunications company operating in the north of the Snaefellsnes Peninsula. TSC argued that Síminn had imposed unlawful commercial barriers on the company and prevented competition, inter alia, by restricting access to Síminn's transmission network for the distribution of television content from the Icelandic Broadcasting Corporation (Skjár 1). Following an investigation into the matter, the Competition Authority found that Síminn had breached two conditions set out in the aforementioned decision of the competition board. No. 10/2005, The merger of Landssíma Íslands hf. and Íslenska sjónvarpsfélagsins hf. thus prevented TSC from competing in the Snæfellsnes area. The Competition Authority imposed a fine of 150 million krónur on Síminn for this.
Síminn appealed the decision of the Competition Authority to the Competition Appeals Board, which concluded the case in March 2010. The Appeals Board confirmed the finding that Síminn had breached the relevant conditions and that these were serious infringements. However, due to, among other things, Síminn's deteriorating financial performance, the fine was reduced to 50 million krónur. Síminn appealed the appeal board's ruling to the courts.
In its judgment today, the Reykjavík District Court has confirmed that Síminn breached the condition which prohibited the bundling of telecommunications and television services. The court concluded that this conduct by Síminn was likely to„weakened the competitive position of smaller telecommunications companies, which based their profitability on operating local distribution networks, such as TSC ehf. This created a risk that they would disappear from the market…“The District Court, however, did not agree with the Competition Appeals Tribunal's finding that Síminn had breached a condition obliging it to grant other companies access to its television and radio distribution network. The court held that it was not sufficiently clear that this condition applied to companies such as TSC.
The District Court did not agree with Síminn's request to annul the administrative fine, pointing to the detrimental effects of Síminn's conduct on the market for internet connections and services in the Snæfellsnes Peninsula. As the court considered the offence to be less extensive, it reduced the fine to 30 million krónur.
The Competition Authority is considering whether to appeal this judgment of the district court to the Supreme Court.
Background information
In the decision of the Competition Council No. 10/2005 A ban was placed on Síminn bundling the sale of telecommunications and television services. This was a measure to ensure that Síminn's competitors in internet services could, on a level playing field, offer their customers attractive television content, as otherwise it could lead to serious anti-competitive effects for smaller rivals. Síminn breached this prohibition by including the Icelandic Broadcasting Corporation's television content, its transmission and distribution, free of charge in the price of its ADSL connections for internet services, thereby distorting competition.
Companies that agree to conditions to remedy a restrictive merger must strive to ensure that the objectives of those conditions are achieved. It constitutes a serious breach by Síminn to go against its undertaking not to take actions such as those at issue in this case.
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