Strengthening competition in the tourism market – The Tourism Association reaches an agreement with the Competition Authority

With Decision no. 24/2015, published today, concludes the Competition Authority's investigation into violations by the Travel Association (SAF) of Article 12 of the Competition Act. SAF approached the Competition Authority and requested a settlement. On that basis, the Competition Authority has exercised its powers under the Competition Act and entered into a settlement with the association. The decision and the underlying settlement prevent conduct that contravenes the Competition Act. At the same time, it ensures that the continued development of the tourism industry in Iceland is based on the principles of healthy competition.

The arrogance

Under Article 12 of the Competition Act, it is unlawful for an association of undertakings, such as SAF, to decide on restrictions of competition or to encourage barriers which are prohibited under the Act. Through the settlement, SAF acknowledges, among other things, that the association's activities have contravened Article 12 of the Competition Act, particularly with regard to the following conduct:

• SAF systematically collected price information from companies in the travel and tourism market, which at a certain point was for the purpose of passing it on to its member companies and encouraging an increase and/or maintenance of prices.
•  SAF promoted standardised terms for businesses in the tourism market.
• SAF assisted with, and issued itself to its member companies, guidelines for various fees that the companies charge, e.g. a fee for service cancellations. SAF has agreed to pay a 45 million króna fine for the infringements, which took place during the period of application of both the previous and the current competition laws.

Changes for the future

It is important to prevent a recurrence of similar conduct in the tourism market and thus promote more effective competition in the long term in this important market. In addition to admitting the infringement and agreeing to pay the resulting administrative fine, SAF has also agreed to make further changes to its operations, including implementing a competition compliance programme and ensuring that SAF's management and staff, as well as the members of the association, are at all times fully informed of the requirements that competition law places on the activities of companies and business associations in competitive markets.

Tourism is one of the cornerstones of the Icelandic economy. It is vital for the continued development of the sector and the economy as a whole that it is built on the foundations of healthy competition. Competition leads to increased corporate efficiency and increases the likelihood of new competitors entering the market to provide competition for those who are less efficient. Competition also fosters innovation, which creates new job opportunities. This process in turn leads to increased productivity and economic progress. At the same time, the consumer enjoys better prices, quality and choice. The conditions set out in this decision ensure that the continued development of tourism in Iceland is based on these principles.

The investigation

The investigation which concluded with the above-mentioned decision was extensive and spanned a long period of the organisation's operations. The investigation lasted for several years. The investigation was significantly delayed between 2010 and 2012. The handling of the case is described in more detail in the decision.