The Competition Authority authorises Fjarskiptin hf. (Vodafone) and Nova ehf. to cooperate on the operation of a mobile phone service distribution network, subject to certain conditions.

The Competition Authority has today authorised Vodafone and Nova to enter into a specific partnership to operate a mobile phone network. The basis of the collaboration is that the parties have agreed to comply with conditions designed to prevent the collaboration on the operation of the network from distorting competition in the mobile services markets at both wholesale and retail levels.

The conditions are also intended to create more options and thereby increased opportunities for existing and new service providers in the retail mobile services market, thus promoting further competition in the relevant markets. An opportunity is also created for better utilisation of investments in underlying mobile network infrastructure.

Vodafone and Nova requested that the Competition Authority grant them an exemption from the prohibition in Article 10 of the Competition Act for the establishment of a joint venture, equally owned by both, to operate a mobile phone network. Under Article 15 of the Competition Act, the Competition Authority is permitted to grant an exemption from the prohibition on company collusion in Article 10, provided such cooperation is, among other things, likely to lead to better use of funds and benefit consumers.

Following an investigation, the Competition Authority considered that there were grounds to authorise the collaboration, provided that certain conditions were met. Vodafone and Nova have now reached an agreement with the Competition Authority, in which the companies commit to complying with those conditions.

The agreement includes the following main points:

•  The wholesale of telecommunications and Nova on the market, in particular for access and call origination in mobile networks (in particular for virtual network operators and resellers), The companies shall ensure equality, objectivity and transparency towards those telecommunications operators that request such access.

•  Provisions concerning the specific independence of the members of the management board of the operating company, which prevent managers of the partners (Vodafone and Nova) from sitting together on the board and from the collaboration becoming a source of further cooperation that would harm competition.

• Instructions on the independence of the directors and key employees of the operating company.
• Instructions on the arrangement of technical cooperation, including the appointment and framework of a temporary technical group for the implementation of the activities.
• Provisions concerning follow-up on the provisions of the settlement, publicity, etc.

The above conditions are based on an assessment of the competitive conditions in the relevant markets. The views of companies and governments in the telecommunications markets were sought. Furthermore, regard was had to comparable foreign decisions and developments in the telecommunications market, particularly concerning the shared use of infrastructure in telecommunications services.

The Competition Authority will shortly publish on its website the decision on the exemption, with reasoning and further explanations of the conditions attached to it.