District court confirms Lyfja og heilsu's breach of competition law and imposes 100 million króna fines

With judgement Today, the Reykjavík District Court upheld a ruling by the Competition Appeals Board, which found that Lyf og heilsa (L&H) had abused its dominant market position when the company took action against Apótek Vesturlands. According to the district court, the infringements were „serious, aimed at preventing the entry of a new pharmacy into a market previously monopolised by the defendant, and then at weakening the new competitor and distorting competition“. The district court also dismissed a claim for a reduction of the fines.

The background to the case is that the Competition Authority launched an investigation into alleged breaches by L&h with a search in September 2007.  The investigation was launched following reports that the company had taken action to prevent Apótek Vesturlands (AV), which had just been established, from establishing itself in Akranes.

By decision No. 4/2010 The Competition Authority concluded that L&H had abused their dominant market position through an organised attack against AV which was directly aimed at distorting competition. L&h's actions consisted, on the one hand, of establishing a so-called loyalty club, which was intended to ensure that important customers would not start doing business with AV. On the other hand, the actions consisted of what L&h called „battle discounts“. These were substantial discounts on key medicines, available exclusively in Akranes. These measures were intended to drive AV out of the market and send a clear message to other parties that it was not worth trying to compete with L&h. The infringements were considered serious, and L&h was ordered to pay a fine of 130,000,000 kr.

L&H appealed the decision of the Competition Authority to the Competition Appeals Tribunal, demanding that it be overturned or the fines significantly reduced. The Appeals Tribunal confirm however, the conclusion of the Competition Authority that L&H had been in a dominant market position and that the company's actions had constituted serious breaches of competition law. The Appeals Board considered fines of kr. 100,000,000 to be appropriate. This ruling has now been upheld by the District Court.