Í April 2013 The Competition Authority fined Valitor hf. 500 million króna for abusing its dominant market position and breaching the conditions of a previous decision by the Authority. The company was found to have abused its dominant market position through actions aimed at its competitors in the market for debit card acquirer services. Valitor's conduct consisted of pricing its debit card acquiring services below its variable costs in 2007 and 2008. Through this undercutting, the company was more likely to secure merchant contracts for credit card transaction handling, which is considered a more profitable service. The extent of this undercutting was significant. The conduct also constituted a breach of Article 54 of the EEA Agreement.
The Competition Authority also concluded that Valitor had breached two conditions to which the company had committed to abide by in a settlement with the Competition Authority which was published in Decision no. 4/2008. The offence included, amongst other things, Valitor misusing confidential information about merchants in its dealings with its competitors in payment processing, to which the company had access by virtue of its position as an issuer of VISA payment cards in Iceland.
Valitor appealed the decision of the Competition Authority to the Competition Appeals Board, which upheld it in its entirety in October 2013. The panel considered that Valitor's abuse of its dominant market position and the breach of the aforementioned condition in the previous decision were serious. Reference was made to the fact that the use of payment cards in transactions for goods and services is very common and widespread in this country. In light of this, and the importance of this market for consumers and business, it is crucial that all price formation is normal and that smaller competitors are not unduly prevented from providing competitive restraint.
Valitor appealed the decision of the Competition Appeals Board to the Reykjavík District Court, which today delivered its judgment in the case. The court concluded that Valitor had intentionally committed serious breaches of competition law. Furthermore, the offences were partly repeated. However, the District Court considered that Valitor's offences had taken place over a shorter period than that assumed by the appeals board. For this reason, the fine was reduced to 400 million krónur. This is the highest fine ever imposed by the courts in cases concerning the abuse of a dominant market position.
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