The operations of the Bankers' Institute are subject to conditions.

The Competition Authority has now concluded its investigation into two cases concerning the Reiknistofu bankanna. In the first case, the future operations of the Reiknistofan and the joint ownership of it by financial institutions were examined. In the second case, the acquisition of Teris (the information company of the savings banks) by the Reiknistofan was reviewed.

The Banks' Computer Centre and all its owners, including commercial banks in Iceland, have reached a settlement with the Competition Authority regarding the outcome of these matters. Under the settlement, these parties agree to detailed conditions intended to ensure more effective competition in the financial market. The conditions are also intended to ensure that other information technology companies can offer their services to financial institutions in competition with Reiknistofa bankanna.

These conditions are published in 13 numbered articles at the end of the decision. No. 14/2012, Application for an exemption regarding the activities of Reiknistofu bankanna hf. and the merger with Teris.

The main points of the conditions are as follows:

• New and smaller financial institutions shall have full access to all the systems and services of the Reiknistofnan on the same terms as its owners, a group in which the three large commercial banks are by far the largest. This is guaranteed through conditions regarding access rules, pricing, a ban on unfair obstacles or discrimination, and confidentiality in the application process.
• Collusive cooperation between competitors in the financial market is prevented on the Reiknistofan platform. For instance, employees of different financial institutions may not sit together on the board, and joint user groups of competitors on the Reiknistofan platform are abolished. Furthermore, existing shareholders are required to regularly offer shares in Reiknistofan for sale, with the aim of ensuring that the company is not solely owned by competitors in the financial market.
• It is a precondition that the Reiknistofan is run as an independent company on a normal basis of profitability. In this way, competitors in the financial market should be able to trust that the specific interests of the Reiknistofan's owners will not create barriers to entry. At the same time, competitors of the Reiknistofan in the information technology market should be able to trust that the Reiknistofan competes on fair commercial terms.
• Information technology companies are being given the opportunity to compete with Reiknistofan for business with financial institutions.  This is done by requiring financial institutions that are shareholders in Reiknistofan to always conduct a tender or price survey to find the most favourable terms when purchasing information technology services. Financial undertakings shall establish detailed procedures for this, appoint specific contacts for IT companies and maintain a list of vendors who have tendered for the service.
• The different tax treatment of information technology services is prevented from affecting who can compete for business with financial institutions. The client, i.e. the financial institution in the shareholder group of Reiknistofan, must therefore define at the outset how the VAT treatment of the service is to be handled, regardless of who the supplier is.

The decision also provides for ongoing monitoring of the conditions. An independent expert shall be appointed to monitor the conditions.

Páll Gunnar Pálsson, Director-General of the Competition Authority:

„Effective competition in the financial market is of great importance to businesses and the general public in Iceland. Therefore, the conditions that have now been set for the operations of the Reiknistofu bankanna are very welcome, as they remove or reduce the risk of various kinds of barriers to competition.

It is also to be welcomed that the Accounting Office and its owners contributed to the resolution of the matter by agreeing to abide by the conditions that have now been set.“

Background information:

Previous observations of the Competition Authority relating to this case

In recent years, the Competition Authority has dealt with several cases concerning the competitive conditions in the financial market. One of the main objectives of these investigations has been to reduce barriers to entry into the financial market, which may, for example, be hidden in the market's underlying systems, i.e. the framework within which it operates. Some of these investigations and actions are precursors to the decision presented here. This should be explained in more detail:

In the decision No. 4/2008 Greiðslumiðlun hf. admitted to having abused its dominant market position through actions directed against a new competitor (PBS/Kortaþjónustan). Greiðslumiðlun and Kreditkort admitted to having engaged in long-standing and extensive illegal collusion, and Fjölgreiðslumiðlun admitted to having participated in it, thereby also breaching the competition law prohibition on restrictive practices by associations of undertakings. The companies agreed to pay administrative fines for this.

Furthermore, the companies agreed to make comprehensive changes to their structure and operations to prevent further breaches of competition law. Among other things, Fjölgreiðslumiðlun committed to seeking an exemption under Article 15. Article of the Competition Act for cooperation that the member companies of Fjölgreiðslumiðlun considered necessary to be carried out by the association, for reasons such as security and optimisation.

That exemption request was received by the Competition Authority in May 2008. A detailed investigation into the operations of Fjölgreiðslumiðlun was then launched, with the aim of determining which aspects of the activity could be carried forward. As part of that investigation, the Competition Authority sent a discussion paper to all the main stakeholders connected with the company's activities. The Competition Authority also obtained, among other things, an analysis from external, independent experts on the matter.

Parallel to this work, strategic planning took place within the financial services sector regarding the future structure of the financial market's core systems. The outcome of that work, among other things, was that the Central Bank of Iceland would withdraw from Reiknistofan bankanna as an owner, instead acquiring full ownership of Greiðsluveitan hf., which would be established on the basis of Fjölgreiðslumiðlun. That company would manage some of the most important core systems of the financial market, while essential information technology services would remain with Reiknistofu bankanna, which would be converted into a limited company and henceforth operated as an IT company owned by financial institutions, as will be described in more detail in this document.

Due to these changes, a merger notification, dated 18 November 2010, was submitted to the Competition Authority regarding the takeover of Greiðsluveitan (formerly Fjölgreiðslumiðlun) by the Central Bank of Iceland. The Competition Authority was also informed that a request for an exemption would be sent to it regarding the establishment of a limited company for the operation of the Reiknistofu bankanna, pursuant to Article 15 of the Competition Act.

These seizures changed the basis of the Competition Authority's aforementioned investigation into the exemption application concerning Multi-payment Processing. That investigation effectively concluded with a decision No. 2/2011, The takeover of Fjölgreiðslumiðlun hf. (now Greiðsluveitunni hf.) by the Central Bank of Iceland, However, that decision imposed detailed conditions on the operations of Greiðsluveitunnar hf., aimed at ensuring that all financial institutions, both existing and new, could connect to its systems and access essential services on transparent and objective grounds. This was intended to ensure that barriers to entry for new and smaller companies in this sector could not re-emerge.

An exemption request concerning the future activities of Reiknistofu bankanna hf. was subsequently received by the Competition Authority on 23 February 2011, in addition to which the Competition Authority received a merger notification concerning the acquisition by Reiknistofu bankanna hf. of part of the assets of Teris, ref. letter dated 31 January 2012. The investigations into these matters are discussed in the decision presented here. In conducting the investigation, the Competition Authority has drawn on, amongst other things, the knowledge and experience it acquired during the investigation of the matters outlined above.