The Competition Authority cleared of the oil companies' claims

In judgments delivered today, the Reykjavík District Court has concluded that the oil companies (Skeljungur, Olís and Ker (formerly the Oil Company)) were guilty of long-term, serious collusion regarding prices, etc. This was „significantly harmful conduct for society as a whole“. The oil companies„ offences were “thoroughly planned and its senior management participated in them knowingly." The Competition Authority was acquitted of the oil companies' claim to have the 2005 ruling of the Competition Appeals Board overturned.

The background to the case is that on 28 October 2004, the Competition Council made a decision, concluding that Olís, Skeljungur and Olíufélagið had committed serious breaches of competition law. The Competition Council decided to impose substantial fines on the companies. The oil companies appealed the Competition Council's decision to the Competition Appeals Board, which delivered its ruling on 31 January 2005. With that ruling, the proceedings before the competition authorities concluded.

The Appeals Board confirmed the Competition Council's findings on the infringements in all material respects and considered it appropriate for the fines against the oil companies to total 1.5 billion króna. Later in 2005, the oil companies appealed the appeal board's ruling to the Reykjavík District Court, and a judgment in the case was delivered in March 2012. In that judgment, it was confirmed that the companies had engaged in illegal collusion, but the appeal board's ruling was nevertheless overturned because the court found that the companies' right to be heard had been violated. The Competition Authority could not agree with that decision and appealed the case to the Supreme Court, which delivered its judgment at the end of January 2013. The Supreme Court dismissed the companies' case from the district court due to significant flaws in their legal submissions. In the Supreme Court's view, the defect was so serious that it warranted the dismissal of the case in its entirety from the courts. The associations' legal action was therefore invalid, and the aforementioned 2005 decision of the appeals board remained standing.

Following the Supreme Court's judgment from January 2013, the oil companies brought new legal proceedings aimed at overturning the aforementioned decision of the Appeals Board. It is in those cases that the district court delivered its judgment today. That judgment means that the decision of the appeals board still stands.

Background information: The oil companies' offences in question are the most extensive cartel offences ever uncovered in this country. The organised illegal activity of the oil companies continued uninterrupted from at least 1993 until the end of 2001, and the Competition Council's decision details around 500 instances of collusion. In their submissions, the oil companies have placed great emphasis on the fact that the collusion between the companies diminished in the latter half of the collusion period. The Appeal Board, concurring with the Competition Council, found that this was not the case. The panel considered that the collusion had been much more serious, more organised and more frequent during the period 1996-2001 than during the period 1993-1995. The oil companies' collusion was divided into three main categories:

• Consultation on the pricing of liquid fuels, gas, lubricating oil and related products. The companies held regular consultations on price changes for these oil products. They also colluded to increase mark-ups and boost profits. The companies also co-operated to reduce discounts and impose charges on certain customer groups. These infringements harmed ordinary consumers and businesses.

• The oil companies had extensive consultation with each other regarding the making of bids in connection with formal tenders or their customers' price enquiries. Examples of victims of this collusion by the oil companies included the City of Reykjavík, Síminn, the Coast Guard, Icelandair, Flugfélag Íslands, the Ministry of Justice, and the Vestmannaeyjar municipality. This collusion was intended, among other things, to prevent customers from securing more favourable prices through tenders.

• The oil companies took various measures to allocate the market for oil products in Iceland among themselves. The measures were aimed at allocating the market among the companies by geographical area, customer, after-sales service and volume. The companies, for example, reached an agreement for Skeljungur to have exclusive petrol sales in Grindavík, and they shared business, for instance, in Ísafjörður and Stykkishólmur. They also shared sales to large customers, such as the Straumsvík aluminium smelter and SR-Mjöl. They did this without the knowledge of the customers concerned.

To carry out this consultation, the oil companies had frequent and organised communications with each other. The oil companies' managers participated in meetings; for instance, the companies' chief executives frequently met to organise and make decisions on matters that were part of the illegal collusion. Messages and information concerning the collusion were also exchanged by email, telephone calls or fax. The companies were fully aware that this was illegal conduct, as the case file contained instructions for secrecy and the destruction of evidence.

The collusion of the oil companies involved using illegal methods to maximise their profits at the expense of consumers and all the businesses that used petroleum products in their operations at the time. Today's district court judgment (and the ruling of the Court of Appeal and the decision of the Competition Council) details the significant illegal profits made by the oil companies from these offences and argues that they were liable to cause significant harm to society. Previous news about the oil companies' collusion:

http://www.samkeppni.is/media/frettir_2004/20041029_frettatilkynning_Vidurlog_ologmaets_samrads_oliufelaganna.pdf http://www.samkeppni.is/media/frettir_2004/20041029_samantekt_ologmaet_samrad_oliufelaganna.pdf