Regarding a report in Viðskiptablaðið today about fines imposed by the Competition Authority and rulings of the Competition Appeals Board in fine cases

Í Today's business newspaper reports on fines imposed by the Competition Authority on companies for breaches of competition law, and the Competition Appeals Board's review of those same fines. The article suggests that the Competition Appeals Board has significantly reduced the fines imposed by the Competition Authority, and that fines are imposed much more frequently here than in the other Nordic countries.

In light of the news report, the following should be made clear:

1. The Viðskiptablaðið newspaper reports under the headline „It is natural that fines are reduced“. From the report's presentation, it can be inferred that this is the opinion of the Director of the Competition Authority.

That is not the case. The Competition Authority imposes fines after assessing the circumstances of the case and the seriousness of the infringements. It follows that the amount of fines in the Competition Authority's decisions reflects what the Authority considers to be the appropriate outcome.

However, companies enjoy strong legal protection, which manifests itself in the fact that they can appeal the supervisory authority's decisions to an appeals board and the courts. There, the supervisory authority's decisions are subject to more detailed review and it is inevitable that this review will, in some cases, lead to changes to the supervisory authority's original decision.

2. The report states that the appeals board has reduced fines in three of the last four cases in which the Competition Authority has fined companies by more than one billion króna.

It should be noted that in two of the three cited cases, the Appeals Board did not assess fines when it annulled a decision. In the second instance, in the so-called Já case, the decision was annulled because the Appeals Board considered that in its review of Já's pricing, the Competition Authority should have made an independent assessment of certain cost-related aspects, rather than relying on a study by the Postal and Telecommunications Authority. The panel therefore did not make a substantive assessment of the authority's decision on the fine. In the other case, the so-called MS case, the case was remitted for a new investigation in order to assess the effects of a contract that MS first submitted to the appeal board, but had not submitted to the Competition Authority despite repeated requests for explanations and evidence. Only in one of the above cases did the Appeals Board assess the amount of fines, namely in a recent ruling where Byko's infringement of the competition law ban on illegal collusion was, in substance, upheld. The panel considered that the infringements were not as serious as those found by the Competition Authority.

3. The report rightly states that the total fines confirmed by the appeals board amount to approximately 60% of the total fines imposed in the initial decision of the Competition Authority. This proportion is similar when looking at the 8-year period before the crash, i.e. from when the sanctioning powers were first applied, and the 7-year period after the crash. Of the fine cases that have gone to the Appeals Board, fines remained unchanged in 3 cases before the crash, compared with 11 cases after the crash. Fines were reduced in 12 cases before the crash, compared with 7 cases after the crash. Fines were quashed in 2 cases before the crash, compared to 2 cases after the crash.

4. The article publishes a table of several cases in recent years where fines have been imposed. It correctly states at the bottom of the table that it is not exhaustive. For example, the table does not mention the fine for Valitor's breach of competition law, where a 500 million króna fine was upheld by the Competition Appeals Board. The appeal panel's ruling on the offence was upheld by the Reykjavík District Court on 6 May, but Valitor's fine was reduced to 400 million króna, as the district court considered Valitor's infringement to have lasted for a shorter period than the appeal panel had.

The table also specifies the proportion of fines relative to the profit or loss of the previous year. The fines published in the Viðskiptablaðið table amount to between 0.3 and 4.5 per cent of the respective company's turnover. In 6 out of 8 cases, the fines are under 2% of turnover. The maximum fine is 10% of turnover under competition law, but this rule is set to ensure general proportionality.

It can be seen from this that the Competition Authority's fine decisions are well within the limits set by competition law. They are also well within the guidelines set by the EFTA Surveillance Authority. The competition authorities have in fact been criticised for this, not least in light of the fact that in about a quarter of cases since the crash, the fined company has previously breached competition law. This is an indication that the deterrent effect of previous interventions has not been sufficient.

5. The article publishes a comparison by Viðskiptablaðið of the extent of competition law in Iceland compared to the other Nordic countries. A per capita metric is used as the basis. That metric is obviously meaningless in this case, as it does not take into account other circumstances in the respective countries. In this regard, it should be noted that academics have pointed out that collusion by companies is both more likely and more damaging in small economies like ours.