The Competition Authority mandates financial separation for the competitive operations of healthcare institutions.

The Competition Authority has made a decision No. 12/2013, Financial separation at the West, South and East Health Authorities. The decision provides for a financial separation between the part of the operations of the health institutions in West, South and East Iceland that is in free competition and the part of the operations that is run with public funding.

The Competition Authority has emphasised preventing so-called public restrictions on competition, i.e. ensuring that the implementation and legislation of the public sector do not unduly restrict competition. In this context, one may, among other things, refer to a report by the Competition Authority. No. 2/2008, Robust development – opening up markets and boosting business activity and the opinion of the Supervisory Board no. 2/2009, Government assessment of competition. Article 14 of the Competition Act provides the Competition Authority with the power to order financial separation for public undertakings or undertakings that operate, in part, under the protection of a public monopoly or concession. It is important to ensure that the part of such entities' operations which is in free competition is not subsidised with funds from the part of the operation that enjoys a public monopoly or protection. If this is not ensured, there is a risk that competition in the market will be distorted and that public funds will not be used efficiently. 

The investigation into the matter began following The Competition Authority received a submission from Vinnuvernd Ltd. Vinnuvernd is a company that specialises in specialised health services and health promotion in the workplace. The Health Institutions of West, South and East Iceland have offered companies services comparable to those provided by Vinnuvernd. The presentation from Vinnuvernd stated, among other things, that the company's assessment was that the financial separation was not sufficiently guaranteed in the operation of the health institutions. The Competition Authority's assessment was that the financial separation in the matter needed to be formally stipulated.