The newspaper Viðskiptablaðið reported on 10 May that the securities custody company Verdis (formerly Arion Securities Custody) will soon become part of Arion Bank. The article states that last year, Landsbankinn intended to buy a stake in the company to save its operations. However, the bank gave up waiting for a final decision from the Competition Authority. It then waited for a year for the decision.
For this reason, the Competition Authority considers it appropriate and necessary to outline the handling of the investigation as it currently stands. The Authority's investigation began on 6 May 2011, when it received sufficient evidence and deadlines started to run. The case concluded with Decision No. 34/2011 on 17 October 2011, or within the time limits that the legislature has granted the Authority for investigating merger cases.
The Competition Authority invalidated Landsbankinn's acquisition. Before this, the competition authority had repeatedly given the parties the opportunity to propose conditions that could have addressed the distortion of competition caused by the joint control of two large commercial banks over a key service company. At that time, the parties to the case were not prepared to go as far in this regard as the supervisory authority considered necessary.
The parties to the case appealed the decision of the Competition Authority to the Competition Appeals Board on 14 November 2011. Before the panel, the complainants put forward more extensive proposals for conditions than they had previously when the Competition Authority was reviewing the merger. On 16 February 2012, the Appeals Panel overturned the Competition Authority's decision. The Board did not rule on the merits of the case but directed the Competition Authority to reconsider whether it was possible to impose conditions on the acquisition.
The Competition Authority launched a new investigation into whether conditions could be imposed on the banks' joint control of Verdis. At the end of March, Landsbankinn announced that the purchase had been abandoned. At that time, the merger parties were aware that the Competition Authority's handling of the case was in its final stage.
The Competition Authority is not aware of the reasons why Landsbankinn's acquisition of a stake in Verdis was withdrawn. It is clear, however, that the reason cannot have been that Landsbankinn gave up waiting for the Competition Authority's decision, as it was known that the latter investigation was in its final stage. It is a matter for consideration why the parties to the case saw no reason to wait for it, given that they themselves had taken the initiative in the matter and had driven it to the stage it was at, with their appeal to the Appeal Board.
Barriers to competition in the financial market can have very negative consequences for Icelandic business and consumers. It is therefore crucial to prevent any form of distortion of competition that may arise from the joint control by competitors in the financial market over important service companies such as Verdis.
In this connection, it can be reported that a settlement is currently being finalised between the Competition Authority and the Reiknistofan bankanna and its owners, whereby these parties are subjecting themselves to detailed conditions intended to remove competition distortion that may arise from the Reiknistofan and the ownership of commercial banksFurther details of the settlement will be set out in a separate decision to be published shortly.
Páll Gunnar Pálsson
Director-General of the Competition Authority
[This article was published as a feature in the Viðskiptablaðið on 16 May 2012.
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