At the end of 2009, The Competition Authority to the conclusion 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 that the company TSC submitted to the Competition Authority. 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, including by obstructing access to Síminn's transmission network for the distribution of television content from the Icelandic Broadcasting Corporation (Skjár 1). Following an investigation, the Competition Authority found that Síminn had breached two conditions set out in the aforementioned decision of the Competition Board no. 10/2005, Merger of Landsími Íslands hf. and Íslenska sjónvarpsfélagið hf., and thereby prevented TSC from participating in competition in the Snæfellsnes area. The Competition Authority imposed a fine of 150 million krónur on Síminn for this.
The telephone company appealed the decision of the Competition Authority to Appeals Committee for Competition Affairs 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 breaches. 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 January last, the Reykjavík District Court confirmed that Síminn had breached the condition which prohibited the bundling of telecommunications and television services. The court concluded that this behaviour by Síminn was liable to „weaken the competitive position of smaller telecommunications companies, which based their profitability on the operation of local distribution networks, such as TSC ehf. This created a risk that they would disappear from the market …“ However, the District Court did not agree with the conclusion of the Competition Appeals Board that Síminn had breached a condition obliging it to grant other companies access to its distribution network for television and radio. 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 internet services in the Snæfellsnes region. As the court considered the offence to be less extensive, it reduced the fine to 30 million krónur.
Both the Competition Authority and Síminn appealed the district court's judgment to the Supreme Court. In its judgment today, the Supreme Court upheld the district court's aforementioned finding of Síminn's infringement. However, the Supreme Court considered it appropriate, in light of the nature of Télís's infringement, to increase the company's fine. The Supreme Court therefore overturned the district court's decision to reduce the fine, and Télí is therefore to pay a fine of 5 million krónur, instead of 3 million.
In Competition Council decision no. 10/2005, a ban was placed on Síminn bundling the sale of telecommunications and television services. This was a measure to ensure that Símans' 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 competitors. 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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