Last April, the Competition Authority fined Valitor Ltd. 500 million kronor for abusing its dominant market position and breaching the conditions of a previous decision by the regulator. The company was found to have abused its dominant market position through actions aimed at its competitors in the market for debit card acquirer services. Valitor's conduct consisted of pricing its debit card acquiring services below its variable costs in 2007 and 2008. Through this undercutting, the company was more likely to secure merchant contracts for credit card transaction handling, which is considered a more profitable service. The extent of this undercutting was significant. The conduct also constituted a breach of Article 54 of the EEA Agreement.
The Competition Authority also concluded that Valitor had breached two conditions to which the company had committed to comply with a settlement with the Competition Authority, which was published in a decision. No. 4/2008. The offence included, amongst other things, Valitor misusing confidential information about merchants in its dealings with its competitors in payment processing, to which the company had access by virtue of its position as an issuer of VISA payment cards in Iceland.
Valitor appealed the decision of the Competition Authority to the Competition Appeals Board, primarily demanding that the decision be quashed, and alternatively that the fine be cancelled or significantly reduced.
In its ruling yesterday, in the case No. 4/2013, the Appeals Board for Competition confirms the Competition Authority's finding of an infringement by Valitor as set out above. The Board considers that the company's abuse of its dominant market position and the breach of the aforementioned condition of a previous decision are serious. Reference is also made to the fact that the use of payment cards in transactions for goods and services is very common and widespread in this country. In light of this, and the importance of this market for consumers and business, it is crucial that all price-setting is normal and that smaller competitors are not unduly prevented from providing competitive pressure.
The appeal board's ruling specifically addresses the deterrent effect of fines and the repetition of an infringement. The appeal board stresses that administrative fines under competition law are intended, among other things, to have a deterrent effect, and that the amount of the fines is important in this regard. The panel notes that it is clear that a previous fine of 385 million kr., which the appellant undertook to pay pursuant to the aforementioned decision No. 4/2008, has not had a deterrent effect on the company's further breaches.
Referring to this and further arguments specified in the ruling, the appeals board confirms the 500 million króna fine imposed on Valitor by the Competition Authority.
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