The Competition Authority has been investigating alleged breaches by Byko and Húsamiðjan of the prohibition on illegal collusion, pursuant to section 10 of the Competition Act, and alleged breaches by Húsasmiðjan and Steinullar of a decision of the Competition Council. No. 19/2002.
The investigation covered incidents that took place up to March 2011. On During the relevant period, Holtavegur 10 ehf. operated building supply stores under the name Húsasmiðjan (hereinafter „the old Húsasmiðjan“). Later, this business and the trademark of Holtavegur 10 ehf. were sold to a new owner, who today operates Húsasmiðjan ehf. The breaches of competition law that have been acknowledged, and are described here, are not related to the new owner of Húsasmiðjan.
Holtavegur 10 ehf. and Húsasmiðjan ehf. approached the Competition Authority and requested a settlement. On that basis, the Competition Authority has exercised its authority under competition law and entered into a settlement with the companies.
With the settlement, the then-operator of Húsasmiðjan, at 10 Holtavegur, acknowledges serious breaches of competition law and a previous decision by the competition authorities. The settlement includes the following:
It is acknowledged that the old Húsasmiðjan breached Article 10 of the Competition Act through extensive illegal collusion with Byko. This collusion by the old Húsasmiðjan included, among other things:
Regular, usually weekly, communication with Byko regarding prices, stock levels, etc., with the aim of increasing prices/counteracting price reductions on so-called 'rough building materials' (rough goods, e.g. timber, rock wool and steel).
Collusion with Byko to increase prices in all offers on bulk goods in stages.
Collusion with Byko to work against price competition in the sale of treated timber (decking material) during the product's main selling season and instead attempt to raise prices.
Having made a joint attempt with Byko to get Múrbúðin to participate in a consultation on the prices of building materials, and having decided with Byko to monitor Múrbúðin's activities in the market.
It is acknowledged that the old Húsasmiðjan violated conditions set out in the decision of the Competition Council No. 19/2002. Those conditions were set because to buy Byko, Húsasmiðjunnar and Kaupfélags Skagfirðinga hold shares in Steinullarverksmiðjan hf. (now Steinull hf.). The conditions were intended to prevent the joint ownership of Steinullarverksmiðjan hf. (now Steinull hf.) by Byko and Húsasmiðjan from restricting competition. It is acknowledged that the old Húsasmiðjan had breached the conditions, inter alia, by having used its position against Steinull to prevent Múrbúðin from obtaining certain commercial terms and thereby had a detrimental effect on Múrbúðin's competitive position in the bulk commodities market.
The aforementioned settlement regarding Holtavegur 10 facilitates the continuation of the Competition Authority's investigation. This leads to a change in the market being made sooner than would otherwise have been the case, which has a positive effect on competition and consumers. It is also significant that, right at the start of this investigation, measures were taken within Húsasmiðjan to prevent further infringements.
The fact that a company settles and admits wrongdoing justifies a lower administrative fine than would otherwise be the case. This creates an incentive and an opportunity to speed up the investigation and actions for the benefit of consumers. The Competition Authority considered it appropriate for Holtavegur 10 to pay a fine of 325 million kr. for the breaches.
Although the owners of the new Húsasmiðjan are not connected to the aforementioned infringements, the Competition Authority considers it important to prevent similar breaches from occurring again and thus promote more effective competition in the long term in this important market. In parallel with the settlement with Holtavegur 10, the Competition Authority has also reached a settlement with Húsasmiðjan.
The settlement entails a tightening of the conditions governing the ownership of Steinullar. Among other things, this means that a representative of Húsasmiðjan will step down from the board of Steinullar and will be replaced by an independent director. Furthermore, Húsasmiðjan commits to implementing and maintaining a competition compliance programme and ensuring that the company's management and employees are always fully informed of the requirements that competition law places on the activities of companies in a competitive market.
Background information:
On 8 March 2011, the Economic Crime Department of the National Commissioner of Police (now the Office of the Special Prosecutor) carried out searches at the premises of Byko, Húsasmiðjan and Úlfurinn, in cooperation with the Competition Authority.
The investigation by the Office of the Special Prosecutor focused on the alleged offences of the companies' employees and was based on a complaint from the Competition Authority, which is an offence investigated by the police following a complaint from the authority. The Special Prosecutor has now charged certain employees.
Parallel to the Special Prosecutor's investigation into individual offences, the Competition Authority has investigated the offences of the companies concerned. In May, the Authority issued a detailed statement of objections to the parties to the case, setting out its preliminary assessment of the alleged infringements. Subsequently, the aforementioned companies requested an amicable settlement with the Competition Authority, as previously noted.
The above-mentioned settlement is unrelated to the case that has been pursued by the Special Prosecutor.
Alleged breaches by Byko and Steinullar are still under investigation by the Competition Authority.
"*" indicates required fields
