Here you will find answers to various common questions that are regularly directed to the Competition Authority. If you have a question about competition matters that you would like an answer to, you can send an enquiry to samkeppni@samkeppni.is It cannot be guaranteed when or if an enquiry will be answered, but if an enquiry is accompanied by an email address, the enquirer will be sent an email when the answer is published on the Competition Authority's website.
In 2007, the criminal liability of individuals for breaches of competition law was further defined. The amendments made the criminal liability of individuals clearer and provided for more detailed provisions on division of labour and cooperation between the competition authorities and the police in the investigation of offences against competition law.
The criminal liability of individuals for breaches of competition law is limited to offences involving illegal agreements, which are considered the most serious breaches of competition law. The reason for this is that in cases where collusion is suspected, significant interests of consumers and business are at stake, as illegal collusion between companies can result in serious economic harm. Under the current competition law, an individual, i.e. an employee or director of a company, who carries out, encourages or has carried out concerted action, may be subject to fines or imprisonment for up to six years. Specifically, the criminal liability covers collusion on prices, discounts, surcharges or other commercial terms, collusion on the division of markets and the restriction of production, collusion on the making of offers, collusion to refrain from dealing with certain companies or customers, and the provision of information on these specific matters. It also includes collusion between companies that aims to prevent them from competing with each other.
Abuse of a dominant position cannot be penalised in the same way for individuals. The explanatory memorandum to the bill stated:
It is a fact that the abuse of a dominant position, pursuant to Article 11 of the Competition Act, can cause significant damage to society, and there are grounds for arguing that such abuse should be punishable in the same way as illegal collusion. However, it is considered that the application of such a penal provision could be problematic, as it may be necessary to carry out a complex economic analysis to determine whether the company in question holds a dominant position. Furthermore, in exceptional cases, it may be difficult for a company to determine whether it holds a dominant position within the meaning of Article 11 of the Competition Act. Furthermore, it should be borne in mind that Article 11 of the Act prohibits conduct that may be normal and even pro-competitive where a company is not in a dominant position. On this basis, there is no reason to impose a penalty for the abuse of a dominant position. The conclusion is consistent with the competition law of most Western countries, which provides for penalties for competition offences, e.g. the United Kingdom, Norway and the United States.
Individuals who commit competition law infringements are only subject to a public investigation following a complaint by the Competition Authority to the police. The Competition Authority assesses on a case-by-case basis, taking into account the gravity of the infringement, whether to refer a case to the police. It is important that the Competition Authority maintains consistency in the handling of comparable cases. It should also be noted that the Competition Authority may decide not to prosecute an individual if he or the company he works for has taken the initiative to provide the Competition Authority with information or evidence concerning infringement of competition law which can lead to the proof of the infringements or is considered a significant contribution to the evidence already in the possession of the Competition Authority.
The Competition Authority is authorised to hand over to the police authorities any data and information it has obtained relating to the alleged offences under investigation. Likewise, the police may hand over to the Competition Authority any data and information that may be relevant. Furthermore, the Competition Authority is authorised to participate in police operations concerning the investigation, and the police are likewise authorised to participate in the operations of the competition authorities.
Yes. It is possible to be a party to an illegal agreement even if others handle its implementation, and it is also possible to be a party to an agreement where no one does anything, i.e. an agreement on inaction. The prohibition of unlawful collusion under competition law does not only cover direct actions, but also agreements concerning actions or inactions.
It is best to provide an example in this answer:
Representatives of three companies are sitting in a meeting. Representatives of two companies conspire to establish an illegal cartel involving all three companies. The cartel is planned and launched, without the direct participation of the third representative. Nevertheless, he would be considered a party to the collusion because he was present at the meeting where the collusion was established and planned, and was thus fully aware of it.
To not be considered a party to the consultation, the third representative would have had to make it very clear that they would not be taking part in the consultation. Even by taking their glass of water and spilling it to draw attention to their point.
Article 12 of the Competition Act states that associations of undertakings are prohibited from deciding on restraints of competition or encouraging barriers which are prohibited under the Act. Legislative history states that the provision emphasises that both associations of undertakings and the undertakings themselves are prohibited from establishing or encouraging barriers that contravene the prohibitions in the Act. It is clear from this that an infringement of Article 12 constitutes a standalone infringement of competition law, even though the substantive content of the provision is to some extent set out in other provisions of the competition law, such as Article 10.
A decision of an association of undertakings, within the meaning of competition law, refers to any binding or non-binding decision or recommendation which the association issues to its member undertakings in such a way that it is capable of affecting the commercial conduct of the members. No formal requirements apply to these decisions by associations of undertakings. The use of the term 'incitement' in Article 12 of the Competition Act indicates that the legislature intended to place particular emphasis on the provision covering any non-binding measures by business associations that are aimed at distorting competition. The term 'incitement' in Article 12 of the Competition Act thus covers all actions and measures by business associations intended to encourage member undertakings to behave in a certain way. The wording of the provision implies that such an incitement can be in any form whatsoever. It follows that various actions by business associations, such as guidelines, recommendations or the provision of information, can fall within the scope of Article 12 of the Competition Act if these actions are intended to, or have the effect of, preventing or distorting competition.
It must also be borne in mind that, in the context of business associations, a risk arises of information exchange which may contravene the prohibition in Article 10 of the Competition Act, even if this is not the intention. Article 10 of the Competition Act strictly prohibits all collusion between competitors, as well as concerted practices between them. This means that any collusion between competitors in the market regarding prices, discounts, terms of trade, market sharing, production or other business matters is prohibited. Collusion can include any form of communication between the employees of competitors, whether the communication is one-way or two-way.
The amount of fines depends on the nature and extent of the offence, how long the offence has been ongoing, and whether it is a repeat offence. Other factors may also be taken into account, such as the size of the infringing company, the intent of its management and profit considerations. Fines can amount to up to 101% of the infringing company's annual turnover. It should be borne in mind that business associations are also fined for competition law infringements. In the case of associations, the fine is determined based on the turnover of the association itself or the turnover of each of its members who is active in the market concerned by the association's infringement.
There is no requirement that a company must be run for a profit for fines to be imposed for a breach of competition law. However, it is clear that the imposition of fines takes into account each individual case as well as the general objective of deterrence. In the context of competition law, fines should therefore contribute to the enforcement of competition legislation and thereby increase competition. As provided for in competition law, a decision to impose a fine may be waived if the infringement is considered minor or if, for other reasons, a fine is not considered necessary to contribute to and strengthen effective competition.
Whether or not companies are run at a profit is not, in itself, a decisive factor when it comes to assessing whether and to what extent a company in breach should be fined. Here it is possible to Read more about how fines are determined.
Can companies reduce their fines if they disclose illegal collusion in which they are involved?
Rules on the waiver or reduction of fines apply exclusively to infringements concerning illegal collusion. An undertaking that is a participant in an illegal collusion or an illegal concerted practice may have fines that would otherwise have been imposed on it waived or reduced. To be eligible for a full remission of fines, a company must either be the first to alert the Competition Authority to an infringement of the prohibition on illegal collusion and provide evidence that leads to the Authority initiating an investigation into the relevant infringement of competition law.s or be the first to voluntarily provide the Competition Authority with evidence that enables it to prove such an infringement. A company cannot have fines wholly waived unless it shows full cooperation and provides all relevant documents and information in its possession concerning the infringement. Furthermore, the company in question must cease its participation in the infringement and must not have coerced other companies into participating in the illegal collusion.
In this context, it is crucial that the company in question is first to the table, that is to say, the first to alert the Competition Authority to the existence of an illegal cartel or the first to provide evidence that enables the Authority to prove such a cartel. Fines will not be fully waived unless the Competition Authority did not previously have sufficient evidence to initiate an investigation or to prove an infringement.
Other than as set out above, a company may have fines reduced if it submits evidence that constitutes a significant addition to the evidence already in the Competition Authority's possession. It is in a company's best interest to be the first to submit evidence that constitutes a significant addition, as the company that does so will receive the largest proportional reduction. If more companies come forward later and submit data to the Competition Authority that qualifies as a significant addition, the proportional reduction they can receive on their fine is lower than that of the company that came before them. The company that comes next receives a smaller reduction than the first one, and so on.
When assessing which data constitutes material evidence, consideration is given to the extent to which the data helps to establish the facts of the case, taking into account the nature and accuracy of the data. Generally, written evidence that originates at the time the wrongdoing occurs is of greater value than evidence that comes into existence later. Furthermore, direct evidence is more significant than circumstantial evidence.
The Competition Authority's rules on the remission and reduction of fines are numbered. 890/2005 and can be accessed here.
One of the fundamental principles of competition law is the prohibition on price-fixing between companies. Illegal price-fixing occurs when companies enter into an agreement or, through concerted practices, follow a common plan that restricts, or is likely to restrict, their independent conduct in the market. This means that companies must independently decide, each for themselves, how they intend to behave in the market. However, this requirement for independence does not prohibit companies from taking action in response to the behaviour of their competitors in the market. It does, however, prohibit any form of communication between competitors, direct or indirect, which has or could have the effect of reducing or distorting competition between them. For example, a company commits an offence of unlawful collusion if, in a meeting, telephone conversation, letter, email or otherwise, it holds discussions or exchanges or receives information about matters relevant to the determination of price. The mere fact that competitors in a market price their products similarly or in the same way, and follow each other in price changes, is therefore not in itself sufficient to demonstrate that an illegal price-fixing agreement is in place.
Accordingly, for there to be an illegal price-fixing, it is a condition that the companies in question have had some form of direct or indirect communication with each other. It may, of course, be difficult in individual cases to distinguish between, on the one hand, concerted practices of undertakings, in which they consciously participate in order to restrict competition, and, on the other hand, situations where undertakings behave in the same or a similar manner on the market as a result of competition. An example of the latter is a duopoly, where companies in, for example, a transparent market are constantly mindful of how their competitors will react to a particular market action, such as a price reduction. However, an examination of the market and market conditions should usually be able to reveal whether coordinated actions are taking place. Under certain circumstances, similar behaviour by competitors in the market can be an indication of illegal collusion.
You can read more about illegal collusion. here.
In short, the answer is yes; all business-to-business collusion that distorts competition is prohibited. It is a fundamental principle of competition law that companies in competitive markets should act independently on all matters on which they compete. These include, for example, decisions on product range, service offerings and pricing.
It does not matter how the collusion takes place, i.e. whether representatives of the companies meet in meetings, correspond with each other, sign formal contracts or agree on market behaviour in any other way. Nor does it matter whether these agreements are binding or merely indicative. What matters when assessing whether it constitutes illegal collusion is whether the objective or effect of these agreements is to restrict or distort competition.
Business associations, the directors of such associations, their employees and persons chosen for positions of trust on behalf of the associations are also prohibited from participating in consultations.
However, competition law recognises that collusion between companies with a small market share has a minor impact on the competitive market and may even improve the competitive position of small companies against larger competitors. Therefore, competition law contains the so-called „block exemption“ which provides that horizontal agreements (i.e. agreements between undertakings operating at the same level of production or distribution, e.g.e.g. agreements solely between retailers) are exempt from the prohibition on collusion, provided the combined market share of all the undertakings involved does not exceed 51% in any relevant market. For vertical agreements (i.e. agreements between undertakings operating at different levels of production or distribution, e.g. agreements between retailers only) the threshold is that undertakings with a market share of up to 10% can restrict competition without infringing the prohibition on restrictive practices.e.g. agreements between wholesalers and retailers) it is assumed that companies with up to 10% market share can consult without infringing competition law.
It is also recognised in competition law that sometimes collusion between companies can have positive consequences, for example if it promotes technological progress and/or contributes to improved production of a product. In appropriate cases, companies can apply for an exemption from the Competition Authority, thereby obtaining authorisation to engage in consultations that would otherwise be considered illegal. Such exemptions must be applied for on a case-by-case basis, unless Group exemptions I don't have.
Further information on the prohibition of unlawful collusion can be found here.
Competition law prohibits any form of anti-competitive cooperation between two or more undertakings. Collusion between competitors is considered one of the most serious infringements of competition law, as competitors are expected to act entirely independently in the market.
Illegal collusion between companies can be both vertical, i.e. collusion between companies at different stages of the supply chain, e.g. between a wholesaler and a retailer, or horizontal, which consists of illegal cooperation between companies at the same level of trade, e.g. between two retailers. Examples of the main types of illegal collusion include:
The types of collusion listed above share the common aim of raising the prices of goods and services to the detriment of consumers. Corporate collusion can therefore have a very damaging effect on competition and worsen the terms on which the general public are offered goods and services.
The Competition Authority has made numerous decisions in which companies have been fined for participating in illegal collusion, but the Competition Authority can impose heavy fines on companies that take part in such infringements, and the fines can amount to up to 10% of the totalturnover of the relevant company or group of companies. In addition, directors of companies involved in illegal collusion may face a prison sentence of up to six years.
As is widely known, any form of anti-competitive cooperation between companies is prohibited under competition law. This is often referred to as illegal collusion between competitors. It can involve illegal collusion regarding, for example, the price of a product or service, the making of tenders when procurement or projects are put out to tender, and the division of markets between companies. Competition-restricting illegal collusion is the most serious infringement of competition law, and all collusion cases are therefore inherently important in the view of the Competition Authority.
Nevertheless, of course, some matters are more important than others. The so-called oil matters, or oil consultation, can probably be considered among the most important and extensive of all the consultation matters that the competition authorities in this country have disclosed, see decision. No. 21/2004 Illegal collusion by Kers hf. (formerly Olíufélagið hf.), Olíuverslunar Íslands hf., Skeljungs hf. and Bensínorkunnar ehf. This included, amongst other things, collusion on prices, mark-ups, the making of tenders and market sharing. Another significant cartel case is the dismantling of an illegal cartel by companies in the vegetable market, see decision No. 13/2001, which included, among other things, price-fixing and market-sharing by distribution companies. Then there was the very serious collusion between companies in the payment card market, see decision No. 4/2008. Finally, reference should be made to a recent case where the companies Tæknivörur and Hátækni had an illegal agreement on the wholesale market for mobile phones, a decision No. 7/2013.
Competition law states that an undertaking has a dominant position:
…when a company has such economic strength that it can prevent effective competition in the relevant market and can operate to a significant extent without taking competitors, customers and consumers into account.
The assessment of a dominant market position is carried out in two steps, namely the definition of the market in which the company in question operates and then an examination of the company's economic strength in that defined market.
When assessing a company's position in the market, the most important factors are its market share in the relevant market and the market structure. Market share provides a very strong indication of a company's position in the market. A very high market share can, in itself, constitute proof that the company in question is in a dominant market position, unless there are exceptional circumstances that suggest otherwise. If a market share is higher than 50%, it is highly likely that the company is in a dominant market position. It is also important to compare the share of the company under assessment with that of other companies in the market. If there is a significant difference in market share between the company with the largest share and the next one in the ranking, it is likely that the former company is dominant. It should be borne in mind that companies can also be in a dominant market position despite having a market share of less than 50%. Furthermore, in exceptional circumstances, companies may be considered dominant despite not having the largest share of the relevant market.
Market structure also matters when assessing a dominant market position, which refers to factors such as barriers to entry (legal barriers and barriers related to the market's structure), financial strength, economies of scale, vertical integration, technological advantage, bargaining power of buyers, access to suppliers, developed sales channels and well-known brands.
It should be borne in mind that the concept of a dominant market position does not imply that there is no competition in the relevant market. A dominant market position can therefore exist despite lively competition in that market.
Existing firms are usually threatened by the potential entry of new competitors into the market in which they operate. The potential entry of new competitors provides a check on the pricing of their products and services to consumers. When a new competitor enters a market, it is often because they believe they have something different to offer compared to the incumbents, and they aim to capture a portion of their market share and profits. Existing companies in the market often respond to the arrival of new competitors by trying to increase efficiency in order to lower prices, or by improving their service. The companies realise that with the arrival of new competitors, they could lose customers and therefore revenue and market share. The effect of increased competition should be a fall in prices. Consequently, it is generally natural and desirable for companies to lower their prices in response to the arrival of a new competitor. However, a different situation may arise if a dominant firm responds to a new competitor with a price cut that involves selling a product below cost price. It can also be an infringement if a dominant company resorts to a targeted price cut intended to distort competition. This refers to a measure directed specifically against the new competitor or the products they sell.
By the above-mentioned actions, the dominant undertaking is sacrificing short-term profit deliberately in order to exclude a competitor from the market or to hinder its entry into the market. Both of these measures involve some form of predatory pricing, as they are directed against a competitor with the ultimate aim of driving them out of the market or seriously harming their competitive position. A specific price reduction or below-cost pricing by a dominant undertaking against a new competitor can constitute an infringement of Article 11 of the Competition Act.
Differing supplier pricing for goods to retailers can mean it is cheaper for a retailer to buy a product from a discount store than directly from the supplier. Discount retailers, which are part of larger retail groups, are known to be able to obtain better terms from suppliers than smaller retailers. In certain cases, this can be considered normal, as larger retail chains can benefit from economies of scale and receive discounts from suppliers, since they purchase many times the quantity of other shops. Suppliers may also offer further discounts to those retail chains if they handle the distribution of goods to their stores and stock them on the shelves themselves. As a result, other retailers that do not receive such discounts may have to pay higher prices to suppliers for the same product. For this reason, the stores have limited ability to compete on price, as they would generally have little profit margin on their sales if they were to match the prices of discount stores within their retail groups. It is possible that the lowest retail price of discount stores is lower than the purchase price for smaller shops. Therefore, it can be more cost-effective for a retailer to buy a particular product from a discount store.
It is therefore of the utmost importance that suppliers pay particular attention to whether the difference in price for individual retailers stems from a natural economies of scale or from the anti-competitive buying power of the relevant retail chain. If a supplier, who is in a dominant position in the relevant market, cannot demonstrate that legitimate grounds underpin the better terms offered to certain parties, then such unfair pricing may constitute an infringement of competition law. The Competition Authority assesses on a case-by-case basis whether pricing is considered legitimate, taking into account the nature of the transaction and the market position of the companies involved.
It should be noted that in the report of the Competition Authority No. 1/2012, Price development and competition in the grocery market, the supervisory authority discussed the trading terms of suppliers to retailers in the grocery market. The Competition Authority launched an independent investigation on the terms of several suppliers to retailers in July 2012.
Undercutting is when a company sells a product or service below a certain cost threshold. Generally, this refers to a price below the average variable cost. Undercutting can be against competition law if the company in question is a dominant firm. Such conduct can potentially create or maintain barriers to entry and thus have detrimental effects on competition.
In assessing whether undercutting constitutes a breach of competition law, it is therefore first necessary to determine whether the company in question was in a dominant position at the time the undercutting took place. If so, the extent of the undercutting and the length of time it has lasted must be considered. Undercutting can constitute an infringement of competition law when a dominant undertaking sells a product or service below cost price continuously for a certain period with the aim of strengthening its dominant position and even to push out a competitor(about) its competitors out of the market or to prevent the entry of new competitors.
Regulations designed to combat predatory pricing are based on the principle that it is undesirable for a dominant market player to use its financial strength to sell a product at an unreasonably low price in order to destroy competition. Although consumers may benefit in the short term from receiving the relevant product at a very low price due to predatory pricing, it is believed that the disruption to competition resulting from this practice leads, in the long term, to higher prices, lower quality, and a reduction in consumer choice. Thus, the consequences of a dominant firm's predatory pricing can be that weaker competitors see no reason to compete. Furthermore, it is clear that the incentive to challenge a dominant firm will be reduced if it is free to respond to competition by selling its product below cost. Finally, a consequence of undercutting can be that competitors are forced out of business.
Theoretically, there are certain instances where undervaluation by a dominant undertaking does not constitute a breach of competition law. It is generally incumbent upon the company concerned to provide convincing, objective justification for this. For example, the sale of stock approaching or just past its sell-by date, or promotional offers on new products, can be possible justifications for undercutting.
Competition authorities have in several instances had to take action due to harmful undercutting by dominant undertakings. Examples of such cases include undercutting Bonus on dairy products in 2005 and 2006, undercutting Icelandair when Iceland Express was entering the market and undercuttingThe phone with a 3G dongle offer which the company did to users in the summer of 2009.
You can read more about the above matters by clicking on the company names above.
According to competition law, a company is dominant in the market when it has significant economic strength and can prevent effective competition, operating to a large extent without having to take competitors, customers and consumers into account. A high market share (greater than 50%), significant financial strength compared to competitors, and barriers to entry are among the factors that indicate a dominant market position.
In some cases, the situation can be such that two or more companies in the same market are considered to be in a so-called jointly dominant position. Such a position allows the companies concerned to coordinate their behaviour in the market without having to take competitors or consumers into account. The companies are therefore in a position to limit competition and increase prices or reduce services.
When assessing whether companies are jointly dominant, it is necessary to examine whether the relevant market is characterised by what has been termed tacit collusion. This refers to situations that enable companies to formulate a joint or coordinated market strategy and operate to a significant extent without taking competitors, customers or consumers into account. Indicators of this include, among others:
It is not a requirement for a joint dominant market position that all the conditions are met. The companies do not necessarily have to formulate a joint market strategy by consulting with each other; it is sufficient for it to arise from their tacit coordination. This means that the companies take mutual consideration of one another and can therefore know with a certain degree of certainty what competitors' reactions will be to specific market actions. The companies therefore lack the necessary competitive restraint, but market conditions lead to them adopting coordinated behaviour, e.g. by limiting the supply of a product or service in order to increase the selling price, with the aim that coordinated market behaviour will maximise their joint profits.
Competition authorities have in several cases examined the jointly dominant market position of companies, see e.g. decision No. 28/2006 where the mergers of Lyfja and Heilsu and Lyfjavers were discussed, see the decision of the Competition Appeals Board in the case No. 6/2006; decision No. 50/2008 (Kaupþing's takeover of SPRON); decision No. 15/2009 (Myndform's purchase of a 50% stake in Þrjúbíói) and decision No. 4/2010 where the abuse by Lyfja og heilsa of a dominant market position was under consideration, see decision of the Appeal Board in the case No. 5/2010.
Article 17 of the Competition Act No. 44/2005 It deals with mergers of undertakings and the remedies available to competition authorities in this regard. The Competition Authority has the power to annul mergers if it considers that a merger hinders effective competition by creating or strengthening the dominant position of one or more undertakings. The Competition Authority's conclusions on the legality of mergers are based on information that the companies involved in the merger are required to submit. Pursuant to Article 17(3) of the Competition Act, the Authority has established rules No. 881/2005 which specifies the information to be included in a merger notification. Such a notification shall contain the information, including documents, requested in the information schedule in the annex to the aforementioned rules. No. 881/2005. The information must be accurate and sufficient. A list of the information that must be included in a notification to the Competition Authority about the merger of undertakings can be found here.
It is generally believed that mergers of smaller companies are not harmful to competition. Therefore, under competition law, it is only mandatory to notify the Competition Authority of a merger when the combined annual turnover of the companies involved is two billion króna or more in Iceland. Furthermore, for notification to be required, at least two of the companies involved in the merger must each have a minimum annual turnover in Iceland of 200 million króna. Despite these general turnover conditions, the Competition Authority has the power to require notification of mergers if the combined total turnover of the merging companies is more than one billion króna. The Competition Authority, however, only applies this power in exceptional circumstances, i.e. when the authority considers that a merger which does not meet the general turnover criteria could reduce effective competition.
The merger of companies operating in the same competitive market, a so-called horizontal merger, can be detrimental to competition in that market. The merger reduces the number of competitors in the relevant market by at least one, which can be problematic in Iceland where there are many so-called oligopolistic markets. Examples of oligopolistic markets in Iceland include the aviation market, the market for scheduled freight services, and the oil market. A merger can, in such circumstances, lead to the merged company attaining a dominant market position or strengthen a dominant position that existed prior to the merger. In cases where a merger is considered to be harmful to competition, the Competition Authority can annul the merger or impose conditions intended to remedy the harm.
Finally, it should be noted that the merger of smaller companies in a particular market can sometimes be desirable and lead to more effective competition in the market. Through the merger, the combined companies can provide larger competitors in the relevant market with greater and stronger competitive pressure than they could individually.
From the perspective of competition law, the general principle is that local authorities or other public bodies can operate in a competitive market, or in other words, carry on a business in competition with private companies in the market. However, when public bodies engage in such competitive activity in the market, stricter requirements are placed upon them than are generally applied to private companies. This is primarily because public bodies, such as local authorities and government agencies, are generally run on public funds. For example, these public bodies receive revenue from the budget or are allocated specific sources of income by other legislation. For this reason, and due to other circumstances, public bodies may have an advantage in competition over other competitors, who must rely on their own financing and revenue generation to cover all operating costs.
It can be said that the requirements placed on public bodies that operate in a way that is or could be competitive with private entities, alongside the performance of public services, are similar to those placed on undertakings with a so-called dominant position.
Based on Article 14. competition law The Competition Authority may require financial separation between a public entity's competitive operations and those operations of the same entity that benefit from a monopoly or protection, e.g. by receiving public funding for the activity. When financial separation is stipulated in this context, it is for the purpose of ensuring that public funds are not used to subsidise competitive activities.
The Competition Authority may then, on the basis of Article 16. competition law, to take other types of intervention than those described above against the conduct of a public authority that has a detrimental effect on competition. Such conduct may be prohibited if it is not authorised by specific legislation governing it. The Competition Authority has, over the years, made observations regarding the inappropriate and anti-competitive way in which public bodies operate. Recent examples include the leasing of state-owned premises for hotel operations, the running of fitness centres in connection with swimming pool operations, and access to gravel pits.
One problem that arises when, for example, a local authority begins to operate in a field that no one else has in that area is that it becomes more difficult than before for a private party to start operating in the same field. Public sector operation can thus hinder private access to the market.
Under competition law, all competition-restricting cooperation between companies is prohibited. This can include, for example, consultation on prices, pricing, discounts or other commercial terms. It is also unlawful to consult on matters such as the submission of tenders when goods or services have been put out to tender. Furthermore, companies are prohibited from dividing markets among themselves, for example by customer or geographical area. All cooperation as described here creates a risk that companies will start to take each other into account, which reduces effective competition.
However, it is recognised that cooperation agreements between companies that do not have the objective of distorting competition can have positive economic effects. The Competition Authority therefore has the power under competition law to grant an exemption from the provisions prohibiting restrictive cooperation between undertakings and their associations. However, the Competition Authority is not permitted to grant an exemption from the prohibition on the abuse of a dominant position in the market.
The Competition Act sets out the conditions that must all be met in order for a collaboration to be granted an exemption. These include that the collaboration contributes to improved production or distribution, promotes technical and economic progress, and provides consumers with a share of the resulting benefits. It is also important that the collaboration does not go beyond what is necessary and does not restrict competition in a substantial part of the market. When assessing whether the conditions for an exemption are met, the circumstances of the market or markets in which the undertaking operates, or on which the exemption has an effect, must always be considered. The competitive effects of the cooperation and whether the conditions are fulfilled must then be evaluated. Exemptions are usually temporary and may be granted subject to conditions imposed on the undertakings concerned to enable their cooperation to succeed. Breach of such conditions may be subject to sanctions under competition law.
In recent years, the Competition Authority has granted numerous exemptions from the prohibitions of the Competition Act. The following are four examples:
Based on Article 19 of the Competition Act No. 44/2005 The Competition Authority has extensive powers to require companies and other parties covered by the law to provide information that is deemed necessary for the investigation of individual cases, including the production of documents for inspection. The Competition Authority can, among other things, require information and data from other government authorities, regardless of their duty of confidentiality, including tax and customs authorities.
The Competition Authority also has a specific legal power under Article 20. clause of the Competition Act to carry out searches and seize documents at the premises of an undertaking and of undertakings' associations in cases where there are serious grounds for suspecting that the competition law or decisions of the competition authorities have been infringed. When carrying out such measures, the Competition Authority shall follow the provisions of the Code of Criminal Procedure concerning search and seizure. The Competition Authority must therefore obtain a court order authorising the search and seizure. The information obtained during such searches may be used by the Competition Authority to base its investigation on. However, those subjected to the search may challenge the legality of the seizure before a court, in accordance with the Criminal Code.
Despite the Competition Authority's extensive powers to obtain data to support its investigations, companies enjoy a limited right to confidentiality in competition law, which means that company representatives are not required to answer questions or provide information that involves subjective assessment of whether competition law has been breached.
To emphasise the significant obligation on companies and public bodies to provide data to the supervisory authority, breaches of the information obligation are subject to, among other things, administrative fines or daily penalties, pursuant to Articles 37 and 38 of the Act.
In 2007, the criminal liability of individuals for breaches of competition law was further defined. The amendments made the criminal liability of individuals clearer and provided for more detailed provisions on division of labour and cooperation between the competition authorities and the police in the investigation of offences against competition law.
The criminal liability of individuals for breaches of competition law is limited to offences involving illegal agreements, which are considered the most serious breaches of competition law. The reason for this is that in cases where collusion is suspected, significant interests of consumers and business are at stake, as illegal collusion between companies can result in serious economic harm. Under the current competition law, an individual, i.e. an employee or director of a company, who carries out, encourages or has carried out concerted action, may be subject to fines or imprisonment for up to six years. Specifically, the criminal liability covers collusion on prices, discounts, surcharges or other commercial terms, collusion on the division of markets and the restriction of production, collusion on the making of offers, collusion to refrain from dealing with certain companies or customers, and the provision of information on these specific matters. It also includes collusion between companies that aims to prevent them from competing with each other.
Individuals who commit competition law infringements are only subject to a public investigation following a complaint by the Competition Authority to the police. The Competition Authority assesses on a case-by-case basis, taking into account the gravity of the infringement, whether to refer a case to the police. It is important that the Competition Authority maintains consistency in the handling of comparable cases. It should also be noted that the Competition Authority may decide not to prosecute an individual if he or the company he works for has taken the initiative to provide the Competition Authority with information or evidence concerning infringement of competition law which can lead to the proof of the infringements or is considered a significant contribution to the evidence already in the possession of the Competition Authority.
The Competition Authority is authorised to hand over to the police authorities any data and information it has obtained relating to the alleged offences under investigation. Likewise, the police may hand over to the Competition Authority any data and information that may be relevant. Furthermore, the Competition Authority is authorised to participate in police operations concerning the investigation, and the police are likewise authorised to participate in the operations of the competition authorities.
Complaints and enquiries regarding unfair business practices, including false or misleading advertising, should be directed to the Consumer Authority, which took over these responsibilities from the Competition Authority and the Competition Council on 1 July 2005. The supervision of unfair business practices and market transparency are provided for in law. No. 57/2005
Alleged breaches of competition law should be referred to the Competition Authority. However, it should be noted that competition law is general legislation which applies to the electricity market insofar as it is not overridden by specific legislation in this area. Under current legislation, competition primarily extends to the generation and sale of electricity, whereas its transmission and distribution will remain a monopoly activity, which is largely regulated. Energy Agency.
Further information on electricity prices and contracts with electricity suppliers can be found on the website. The Energy Agency.
Through our website, the public has the opportunity to send a submission to the Competition Authority. suggestions ...of a possible breach of competition law. When assessing whether such notifications warrant an investigation, the Competition Authority considers, among other things, the potential impact of the alleged infringement or restrictions on competition and the severity of the potential breaches.The experts at the Competition Authority each monitor one or more markets. If the Authority's experts become aware of unusual market behaviour, they can take action and the Competition Authority can subsequently launch an investigation into the matter on its own initiative. The first steps in such an investigation are often for the Authority to gather data and information on business practices and activity in the relevant market. If such an investigation indicates that something is amiss, the Competition Authority can investigate the matter further and take action. Cases taken up on the Competition Authority's own initiative can thus be initiated on the basis of tips from the public or businesses, information appearing in the media, and an assessment of the competitive conditions in specific markets. The Competition Authority may also investigate a matter on the basis of formal complaints received from companies or other interested parties who believe they have been wronged. In rules of procedure The Competition Authority states that anyone is permitted to approach it and draw attention to incidents which they believe breach competition law.
The Competition Authority emphasises that information which serves as guidance on the application of competition law should be accessible to the public and businesses. To this end, the Authority maintains a website with a wide range of information, where publications are published. decisions, News, columns, reports, opinion, and various educational materials. The website was last reviewed in October 2012 in order to make it even more accessible for users. The Competition Authority is also on Facebook and Twitter. It publishes a variety of educational material on lighter topics, in addition to the usual content. In addition, the Competition Authority provides companies and others with information on new decisions, news and reports.
The Competition Authority has published a number of reports on the competitive conditions in various markets, both on its own and in cooperation with the competition authorities in the other Nordic countries. These reports have often been followed up by conferences which have been well attended. Here on this link Reports, speeches and presentations of the Competition Authority can be found.
It must be emphasised that previous decisions of the Competition Authority and opinions published on the authority's website are intended to provide the market with extensive guidance. On the authority's website, for example, its decisions contain analyses of the dominant position in numerous markets. In many cases, there is also a detailed, well-reasoned guide on what dominant undertakings are permitted to do and what they are not. However, the Competition Authority does not, as a rule, provide companies with advance guidance on whether they might be in a dominant position. Despite this, the Competition Authority offers companies and their organisations the opportunity to hold meetings with its staff, where information and opinions can be exchanged on competition matters. It is worth emphasising that the Competition Authority's view is that the companies themselves operating in competitive markets have the best information on whether or not they are dominant. If a manager believes they can use their company to drive a competitor out of the market, they also know they must be careful not to do so through actions that are not based on fair, objective business practices and on reasonable cost considerations. What he must not do is well known. For example, he must not enter into exclusive purchasing agreements, he must not undercut, and he must not launch specific attacks directed against a small competitor. But he may compete on a fair basis.
According to the procedural rules of the Competition Authority, anyone may contact the Competition Authority to report an incident which they believe breaches competition law or distorts competition. There are several ways for the public to provide information to the Competition Authority.
First, it should be noted that it is possible to send a complaint to the Competition Authority. suggestions about possible breaches of competition law via the Competition Authority's website, either anonymously or under a name. The Competition Authority records and reviews all the tips it receives, and also investigates whether there is cause for intervention by the Competition Authority. Such tips can form the basis for the Competition Authority to initiate an investigation of its own accord. It should be noted that a person who sends a tip to the Competition Authority is not considered a formal party to any case that may be initiated as a result.
Information can also be provided to the Competition Authority via its email address., samkeppni@samkeppni.is or by calling 585-0700 and speaking to the specialists at the Competition Authority. The Competition Authority employs economists and lawyers, among others, and these specialists are tasked, amongst other things, with each monitoring the competitive situation in one or more markets.
Furthermore, the Competition Authority receives various information during meetings it holds with both companies and other market participants.
Finally, it is worth pointing out that those with an interest to protect who believe they have been wronged can, of course, send a formal submission to the Competition Authority, requesting that the Authority investigate the matter on the basis of the submission. Information on the requirements for formal submissions can be found in Article 6 of the Competition Authority's Rules of Procedure. No. 880/2005.
Currently valid Competition lawThey are largely based on international models but also take into account Icelandic circumstances. Icelandic competition law is in many respects modelled on the competition rules of the European Union. Of particular note are Iceland's obligations under the Agreement on the European Economic Area (the EEA Agreement) and the European Union regulations which have been incorporated into the EEA Agreement.
In this context, it should be noted that the provisions of competition law prohibiting illegal collusion and the abuse of a dominant position by undertakings are based on the corresponding provisions of the EEA Agreement. Furthermore, the merger control rules of the Competition Act are largely based on the European Union's merger regulations. When interpreting the aforementioned provisions, the Competition Authority therefore generally takes into account the EEA/EU competition law.Finally, it should be noted that the competition rules of the EEA Agreement apply alongside the Icelandic Competition Act. They are applied when agreements and decisions of undertakings in the EEA area can have a direct or indirect effect on trade within the area.
Until mid-2005, the Competition Authority (together with the Competition Council) enforced the prohibition on and supervision of restrictive practices, and was responsible for monitoring unfair commercial practices and market transparency. On 1 July 2005, the Consumer Authority was established by law. No. 62/2005 and it took over the latter part of the Competition Authority's work, along with other tasks. At the same time as the Consumer Authority was established, competition laws came into force. No. 44/2005 and the Competition Authority was then established. The Authority's tasks consist of the competition supervision previously carried out by the Competition Bureau and the Competition Council.
This background may explain why some are not fully clear about which projects fall under the Consumer Authority and which under the Competition Authority.
Laws No. 57/2005 The supervision of business practices and marketing is, among other things, intended to ensure that companies do not apply unfair business practices in its promotional activities to the detriment of consumers. It is difficult to define precisely what constitutes unfair commercial practices, but the provisions dealing with them include a ban on false and misleading information about a product, including in advertisements, a ban on the use of misleading identities, including online, and other prohibitions to the same effect. Article 8 of the Act on the Supervision of Business Practices states that business practices are unfair if they are contrary to good business practice towards consumers and significantly distort, or are likely to significantly distort, consumers' financial behaviour.
The Act on the Supervision of Business Practices and Marketing also contains rules on warranty declarations, duties of confidence, etc. These rules concern the obligation of suppliers of goods and services to provide written instructions where necessary for the assessment of the characteristics of goods and services, a prohibition on making warranty statements that grant rights equal to or inferior to those provided by law, a prohibition on obtaining or attempting to obtain trade secrets by unfair means in the course of business, and a prohibition on the unauthorised use of official and international marks in marketing and promotion.
Finally, the Act on the supervision of business practices and marketing contains provisions on Pricing and market transparency. Article 17 of the Act states that companies selling goods or services to consumers must either mark goods and services with the price or display it in such a prominent manner at the point of sale that it is easy for consumers to see. The Consumer Authority carries out surveys to check whether companies are fulfilling these obligations.
The Consumer Authority also supervises various other laws, including laws No. 80/1994 about journeys, laws No. 121/1994 regarding consumer loans, law No. 46/2000 on door-step and distance selling agreements and laws No. 30/2002 on electronic commerce and other electronic services.
It usually involves some cost and effort for a company to start operating in a new market. The obstacles that companies must overcome in order to operate in markets where they have not operated before are often referred to as barriers to entry. The academic definition of barriers to entry that many economists seem to agree on is attributed to George Stigler (1911–1991), who is associated with the so-called Chicago School of economics and received the Nobel Prize in Economics in 1982. Stigler's definition of barriers to entry was that they consisted of „the cost of production that firms wishing to enter a market must bear in excess of those firms already operating in the market.“ There are various other definitions of barriers to entry; for example, that a barrier to entry is anything that allows firms operating in a market to make unusually high profits from their operations without having to fear that new firms will enter the market. There is also the definition that a barrier to entry is anything that prevents a company from entering a new market when that entry would increase national economic welfare.
If there are no barriers to entry in a market, new companies are expected to enter and start operating in it as soon as profit opportunities arise. This has the consequence that such a market can be more efficient than markets that have barriers to entry. Various types of barriers to entry are a feature of many markets, and a significant amount of time for competition authorities around the world is spent trying to reduce, or remove, existing barriers to entry to increase their efficiency.
Three categories of access barriers
Competition authorities around the world generally look at three types of barriers to entry in their investigations, which are often divided into the following categories according to their nature:
Natural barriers to entry include, for example, sunk costs. Sunk costs are considered to be those costs that cannot be recovered if a company that has started operations decides to cease trading. In industries where there are significant economies of scale, this fact alone can constitute a barrier to entry, as companies in most cases need to reach a certain minimum size in order to produce the relevant product cost-effectively.
Laws and regulations can, in many cases, contribute to positive externalities, e.g. the protection of the environment or the safeguarding of financial stability, but can also involve certain barriers to entry. For example, in many cases, companies need to have certain licences in order to be able to carry out their activities. If the number of licences is limited and they are not traded on a free market, it can be difficult for a new company to enter the market.
Finally, the behaviour of firms operating in the market can act as a barrier to entry. They can make it unattractive for new entrants to enter by, for example, investing in excess capacity. In some cases, they can also arrange matters so that it is not attractive for their customers to switch to another provider. An example of this is the use of so-called loyalty discounts.
Measures to reduce access barriers
When handling cases, the Competition Authority always considers the barriers to entry present in the specific market under review and seeks to assess whether these barriers can be reduced or removed. When barriers to entry stem from laws, regulations or actions by public authorities, the authority can advocate for these barriers to be reduced, for example by issuing opinions or by proposing changes to legislation. However, when the barriers stem from the behaviour of dominant firms operating in the market, the authority can investigate the matter further and take action where necessary.
The concept of „concentration“ or „degree of concentration“ originates in industrial economics. theory of industrial economics) and refers to how market share is distributed among companies in a particular market. In this context, the concentration ratio is used, which is calculated to shed light on how intense the competition is in a particular market.
The concentration ratio is calculated either by adding together the market shares of a specified number of the largest companies in the relevant market, or by calculating the value according to the so-called Herfindahl-Hirschman index.
When the combined market share of the largest companies is calculated, the four largest companies are most often used, but it is also possible to use more or fewer companies than the four largest. The sum of the market shares of the two largest companies is denoted by C2, the corresponding sum for the four largest by C4, and so on. If the four largest companies in a given market have market shares of 40%, 25%, 15% and 10%, then C4 takes the value 90. In this example, C2 would then take the value 65.
The Herfindahl-Hirschman index (a. Herfindahl-Hirschman Index, abbreviated Highest Happiness Index It is calculated by squaring each company's market share in a particular market and then adding all these squares together to obtain the index value for that market.
In the equation above, MH stands for12for the market share of the number one company to the power of two, MH22represents the market share of the number two company to the power of two, etc. If the three largest companies operating in a given market have market shares of 50.1%, 30.1% and 20.1%, the HHI index value is 3,800 (= [50 × 50] + [30 × 30] + [20 × 20]).
In this regard, it should be noted that market share is generally calculated based on company revenues, but the nature of some markets may provide grounds for assessing market share based on other economic factors in a company's operations, such as assets.
The HHI index can take values from near zero, when a market has many small firms, up to 10,000, which is the value obtained when a single firm has 100% market share (a monopoly). Markets with an HHI value below 1000 are generally considered to be actively competitive markets. Markets with an HHI value between 1000 and 1800 have been considered to be moderately concentrated markets. Markets with an HHI value between 1800 and 2000 are approaching being highly concentrated. Markets with an HHI value over 2000 are considered highly concentrated markets. Thus, it can be said that when few large companies operate in a market, the concentration index for that market is relatively high, reflecting rather limited competition. Conversely, the concentration index is low when the market consists of many small companies, which indicates that competition in the market is active.
Market concentration metrics are primarily used by competition authorities to assess the impact of proposed mergers on market competition. It should be noted that various other considerations are also taken into account when assessing the effects of mergers on competition.
The Competition Authority is authorised under competition law to impose administrative fines on undertakings or associations of undertakings that breach certain provisions of the competition law. The main purpose of administrative fines is to have a general and specific deterrent effect, which contributes to the enforcement of competition law and thereby to increased competition. Administrative fines are also intended to improve compliance and make competition law more effective.
Fines for companies for breaches of competition law can amount to up to 10% of their annual turnover. Thus, a company with an annual turnover of 10 billion króna that has participated in a serious and extensive breach of competition law for many years could face a fine of up to one billion króna if its guilt is proven. Under competition law, the Competition Authority shall, when determining the amount of fines, take into account the nature and gravity of the infringements, their duration, and whether they are repeated. Other factors may also be taken into account, either to increase or decrease the fines, such as the size of the companies involved, the state of mind of the management and profit considerations.
Various other factors can also influence the determination of fines by the Competition Authority. For example, fines may be waived or reduced if a company that has participated in an illegal cartel has taken the initiative to inform the competition authorities about the illegal cooperation. By blowing the whistle on the collaboration and cooperating with the Competition Authority's investigation, companies can avoid fines or have their fines reduced significantly. The Competition Authority has established rules on the waiver and reduction of fines, which allow companies participating in an illegal cartel to withdraw from the collaboration. These rules can be accessed here.
The Competition Authority can also conclude cases by settlement and waive or reduce fines for companies that, on their own initiative, come forward and provide information about, or acknowledge, competition law infringements. A decision to impose a fine may also be waived if the infringement is considered minor, or if for other reasons such fines are not considered necessary to promote and strengthen effective competition.
The Competition Authority is a regulatory body tasked with promoting competition in business and applying the remedies permitted by competition law in order to contribute to the achievement of the law's objectives. The Competition Authority's role is therefore not to grant specific rights to citizens, but to prevent companies and public bodies from distorting competition. Thus, the main role of the Competition Authority is to enforce the policy set out in the Competition Act, rather than primarily resolving disputes. In order to implement the policy of the Act and carry out the supervision entrusted to the Competition Authority, it is necessary for the Authority to be able, in general terms, to manage the use of the personnel at its disposal so as to tackle the tasks it deems most urgent in order to promote competition and stuto promote healthy business practices.
With the current competition law, this framework was strengthened and the Competition Authority was granted specific authority to decide which cases warrant an investigation. This power is modelled in part on European competition law, where, for example, the EFTA Surveillance Authority and the European Commission have the power to prioritise cases.
The Competition Authority is a small organisation with just over 20 employees. Its tasks, however, are extensive and cover the entire business sector. Since the financial crash, the number of cases has increased by 80% at the same time as the authority's funding for its core activities has been reduced by 20% in real terms. For this reason, the Competition Authority has had to apply strict project prioritisation. For example, in 2012, around a third of the Authority's intervention time was spent on cases initiated at its own instigation, whereas this proportion averaged around half of its intervention time in the years before the crash and the early years of the recovery.
The cases handled by the Competition Authority vary in size. A great deal of time is spent on a few large cases – for example, 15 cases accounted for half of the authority's handling time in 2012. The remaining time is spread across around 300 cases.
The Competition Authority has spent the most time over the last four years investigating the abuse of a dominant position, with an average of 35% of its disposal time being devoted to these cases from 2009 to 2012. Around 25% of the time spent has been on investigations into illegal collusion, 20% on merger cases, 15% on market analyses and 5% on public procurement restrictions.
The Competition Authority devotes approximately two-thirds of its time to four markets, namely financial services, the retail market, telecommunications, and transport and tourism.
There are various things that managers of companies in the market can do to minimise the risk of the company breaching competition law. The most important thing in this regard is to be familiar with the provisions of the law that prohibit anti-competitive collaboration between companies and the abuse of a dominant market position. In this context, it is essential for managers and other employees to understand and be aware of the company's competitive position. Knowledge of the company's competitive position contributes to more informed and faster business decisions and more effective competition for the benefit of both the company and consumers, as well as potentially preventing legal violations.
Part of the preventative measures taken by larger companies to avoid breaches of competition law can be found in regularly holding competition law training courses and preparing a competition law handbook for key managers and employees. A good tool for ensuring that a company operates in accordance with competition law is to formulate a competition policy as part of its business operations. Such a policy can, for example, include a requirement that all directors, managers and other employees are informed of the requirements that competition law places on companies in a competitive market. Appointing a dedicated competition compliance officer can also be a good way to minimise the risk of breaches of competition law for companies in a dominant market position. Furthermore, the implementation of a dedicated competition compliance programme can also be a useful tool in this regard. The implementation of such a programme is common practice in our neighbouring countries. The programme includes, amongst other things, an analysis of the main risk factors in the company's operations.
In order to make a realistic assessment of a company's competitive risk, answers are required to various questions concerning factors related to the markets in which the company operates, its market position, business and competitive practices, etc. For example, the following factors may be mentioned: What are the product and geographical markets in which the company operates? Is the company in a dominant position in any of these markets? What obligations are imposed on customers? Are the company's contracts and terms and conditions in compliance with competition law requirements? How is pricing conducted? Are employees in contact with the company's competitors?
It is usually the companies themselves that have the best information about their position in the market and whether or not they are dominant. If a manager believes, for example, that they can use the company to drive a competitor out of the market, then it is highly likely that such actions would constitute a breach of competition law. What a dominant company may not do is fairly well known. For example, it may not enter into exclusive purchasing agreements, it may not engage in so-called predatory pricing, and it may not launch specific attacks directed against a small competitor. But it may compete on a level playing field. If companies are in any doubt as to whether a particular course of action complies with competition law, there are various avenues available. Companies can seek expert advice or familiarise themselves with information on markets and competition matters that is already available. Decisions of the Competition Authority, as well as various informational and educational materials, are published on the authority's website and provide the market with extensive guidance.
In this question, the word „competition“ refers to competition between companies in the marketplace, i.e. the effort by companies to win business, if necessary at the expense of their competitors, by offering low product prices and good service. If competition is limited, there is a tendency for prices to rise significantly above the cost of producing, distributing and selling a product or service. The quality of a product or service and the incentive to innovate may also diminish in the absence of effective competition. Effective competition, in turn, provides a check on companies, encouraging them to keep prices low and improve the quality of what they sell.
Iceland is a sparsely populated country compared to its main comparators, e.g. the United Kingdom, Norway and Denmark. Furthermore, Iceland is an island, which in most cases limits the size of geographical markets here, partly due to the time and cost of transporting goods and services to the country. For this reason, companies operating in Iceland's neighbouring countries provide limited competitive pressure here. Consequently, relatively few companies often operate in important competitive markets in Iceland. When market conditions are like this, such markets are referred to as oligopolistic markets (e.g. oligopoly).
In oligopolistic markets, there is significant Consolidation of companies. One method for assessing concentration in individual markets is to use the so-called Herfindahl-Hirschman Concentration Index (HHI). This index is used by both US and European competition authorities. The HHI is the sum of the squares of the market shares of all firms operating in the relevant market. Its value ranges from 0 to 10,000. The higher it is, the greater the market concentration. An HHI below 1000 is considered to indicate low market concentration, an HHI between 1000-1800 signifies moderate market concentration, and it is considered high when the HHI is above 1800. Competition authorities have concluded in various decisions concerning important consumer markets in this country that concentration is considerable in the relevant markets. The greater the market concentration, the greater the general risk of anti-competitive effects. This is particularly the case with regard to infringements of Article 11 of the Competition Act No. 44/2005, which prohibits the abuse of a dominant position. Furthermore, high market concentration can have a significant impact on the assessment of the competitive effects of mergers.
Finally, the situation where a few large companies operate in a particular market and there are various social ties between the companies' executives, as is common in this country, may lead to a greater risk of competitors coordinating their behaviour. Such coordination can consist of the companies mutually taking each other into account in their operations or of them engaging in unlawful collusion. In line with the above, it must be considered that there is generally a greater risk of competition being distorted in smaller economies, where competition is also typically limited.
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