With Decision no. 23/2015, The takeover of Sparisjóður Norðurlands ses. by Landsbanki hf., The Competition Authority has concluded that there are no grounds for intervention regarding Landsbankinn's takeover of Sparisjóður Norðurlands.
The Competition Authority has argued in its previous rulings that the existence of savings banks can present an opportunity for increased competition, for example, by their assets, operating licences and goodwill being used to build a new force that can provide competitive restraint. In this regard, reference may be made, inter alia, to the Competition Authority's Report No. 1/2013, Financial services at a crossroads. However, it has been the responsibility of, among others, the owners of savings banks to take the necessary measures to promote such competitive oversight for the benefit of the public and the business community.
Increased concentration in the financial market indicates that this merger has an adverse effect on competition in the financial market. Furthermore, there is nothing in the case that suggests that different considerations apply to this merger than those that have been the basis in previous cases where a large commercial bank has acquired a savings bank.
In this case, however, it is assumed that the 'zombie company' perspective applies. This leads to the conclusion that the invalidation of the merger would in effect lead to the same outcome. The Competition Authority is of the opinion that the merging parties have demonstrated that this perspective is applicable in this case. The essence of that conclusion is as follows:
– The savings bank does not meet the legal requirements for an authorised financial institution. It is impossible for it, of its own accord, to meet the capital requirements of the Financial Supervisory Authority.
– The fund's largest founding shareholder, the state treasury, which holds a stake of almost 80.1%, has completely refused to provide the savings bank with any funding. This was one of the reasons why the creditors were not prepared to help resolve the matter.
– The Savings Bank took measures to secure third parties, other than the three commercial banks, to provide the fund with capital and become its owners. The Competition Authority is of the opinion that all viable bidders were considered, despite shortcomings in the marketing of the sale attempts.
– Defects in the sales process, both in the timescales and the terms towards individual investors, do not change the outcome of the case. It is highly significant that the bidders had knowledge of the matter due to their involvement in the sale attempts of other savings banks, and furthermore, they withdrew from the matter before the deadline had been fully exhausted. Furthermore, one of the potential investors had not demonstrated his suitability to hold a significant stake in a financial institution, despite the FME having provided him with guidance on the matter.
– From the FME's perspective, it appears that the institution will exercise its powers under the Act on Financial Undertakings if this merger does not go ahead.
In light of the above, the Competition Authority does not consider there to be grounds for intervention in respect of the merger. Further information on this decision can be found in decision The Competition Authority.
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