The Competition Authority has today published a decision No. 2/2014, Purchase of Skeljungur hf by SF IV slhf. The decision concerns the acquisition of the oil company Skeljungur by the private equity fund SF IV. SF IV has an operating agreement with Stefni hf., a fund management company that is a subsidiary of Arion banki. Arion Bank is among SF IV's largest shareholders, but large pension funds also hold a significant stake in the company. The acquisition also included the purchase of the Faroese oil company P/f Magn, which was reviewed by the local competition authorities. The matter concluded with a settlement between the Competition Authority and the merging parties, in which they agreed that certain conditions would be imposed on the merger, including those intended to ensure the independence of Skeljungur as a competitor in the fuel market.
Recently, and in connection with the investigation of this case, the Competition Authority has conducted a general review of how ownership of commercial enterprises has evolved in the wake of the banking collapse. In this context, reference may be made to a report by the Competition Authority. No. 3/2013, Is the lost decade ahead? Strong competition cures stagnation. This observation has revealed that the involvement of pension funds in corporate ownership has grown rapidly, while the ownership of operating companies by banks and resolution bodies has declined. The declining share of bank ownership in competing companies is positive, but the growing share of pension funds, notably through private equity funds, calls for a discussion on their involvement in such ownership and on how it is necessary to safeguard effective competition in these circumstances. In the Competition Authority's view, there is a risk that unclear ownership and limited ownership oversight in commercial enterprises could lead to a distortion of competition. The Competition Authority considers it clear in this context that the scale of pension funds' investments in commercial enterprises will have a decisive impact on the development of competitive markets in the coming years.
The Competition Authority considered it necessary to intervene in this matter and to impose conditions on the merger due to the competitive problems that would otherwise arise from SF IV's ownership of Skeljungur. These problems stem primarily from Arion Bank's shareholding and the involvement of the bank and its subsidiary, Stefnis, in the transactions and the operations of SF IV and Skeljungur. Furthermore, a particular problem arises from the strength of SF IV's owners as investors in the Icelandic market and from potential undesirable ownership links, for example, between Skeljungur and the company's competitors.
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