The Competition Authority publishes a decision regarding the acquisition by Framtakssjóðurinn SF V slhf. of certain companies owned by Norvikur hf.

On 16 January, the Competition Authority reached a settlement with the merging parties regarding the acquisition by SF V slhf, a holding company and subsidiary of SF V, of certain companies owned by Norvikur hf. SF V is owned, among others, by pension funds, Arion Bank and other investors, with an operating agreement with Stefni hf., a subsidiary of Arion Bank hf. In a decision published on the Competition Authority's website, the authority sets out the reasoning for the decision and the conditions to which the merging parties agreed to be bound in connection with the acquisition. The competition problems that may arise from the merger may include, amongst other things, the following:

• Risk that SF V shareholders' holdings in competitors may lead to undesirable incentives that reduce competition in the markets in which the subsidiaries operate.
• Prevent the risk that the intercompany relationships of parties connected to the transaction will lead to the formation of a block and thereby exclude competitors from important business, or result in companies within the block enjoying commercial terms that a third party could be expected not to receive.
• Risk that sensitive business information is shared between parties connected to the transaction and related companies.
• Prevent the emergence of undesirable governance relationships between the subsidiaries, their competitors and their customers.

For this reason, for example, a condition is imposed which is intended to ensure that the acquired companies will be run by Arion. bank, Stefni and other related parties. See the decision for details No. 7/2014. The Competition Authority considered it necessary to intervene in the matter.

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.