With judgments delivered today, the Supreme Court of Iceland has upheld the judgments of the Reykjavík District Court of 19 January 2015 in the oil companies' cartel case.
The Reykjavík District Court concluded that the oil companies (Skeljungur, Olís and Ker (formerly the Oil Company)) were guilty of long-term serious collusion regarding prices, etc. This involved a „significantly harmful conduct for society as a wholet“. The oil companies„ offence was "It was meticulously planned and its senior management participated in it despite better knowledge.“The Competition Authority was cleared of the oil companies' claim to overturn a 2005 ruling by the Competition Appeals Tribunal.
The background to the case is that the predecessor of the Competition Authority, the Competition Council, made a decision on 28 October 2004, concluding that Olís, Skeljungur and Olíufélagið had committed very serious infringements of competition law. The Competition Council decided to impose substantial fines on the companies. The oil companies appealed the Competition Council's decision to the Competition Appeals Board, which delivered its ruling on 31 January 2005. The Appeal Board confirmed the Competition Council's findings on the infringements in all material respects and considered it appropriate for the oil companies' fines to total 1.5 billion króna.
The competition authorities' proceedings concluded with a ruling from the appeals board in January 2005. Later in 2005, however, the oil companies decided to appeal the appeal board's ruling to the Reykjavík District Court, and a judgment in the case was delivered in March 2012. The proceedings in the county court therefore took a very long time, particularly due to the gathering of evidence in the form of expert reports, which the companies considered necessary to undertake.
A District Court judgment from March 2012 confirmed that the companies had engaged in illegal collusion, but the appeal board's ruling was nevertheless overturned because the court held that the companies' right of reply had been violated. The Competition Authority could not agree with this decision and appealed the case to the Supreme Court, which delivered its judgment at the end of January 2013. The Supreme Court dismissed the companies' case from the district court due to serious flaws in their proceedings. In the Supreme Court's view, the defect was so serious that it warranted the dismissal of the case in its entirety from the courts. The companies' legal action was therefore invalid, and the aforementioned 2005 decision of the Court of Appeal stood.
Following the Supreme Court's judgment of January 2013, the oil companies brought new legal proceedings aimed at having the aforementioned decision of the Court of Appeal overturned. The judgments in those cases were, as previously stated, delivered on 19 January 2015, and with today's Supreme Court judgments, the district court's judgments are affirmed with reference to their reasoning. Today's Supreme Court judgments include Final conclusions in the oil companies' consultation case. In a nutshell, the outcome of the case is that the Supreme Court agrees with the competition authorities that the oil companies committed very serious breaches of competition law and that the companies' fines should total 1.5 billion króna. This also means that the Supreme Court did not agree with the oil companies that there were flaws in the competition authorities' proceedings or that their due process rights had not been upheld.
The collusion of the oil companies involved using unlawful methods to maximise their profits at the expense of consumers and all those businesses that used petroleum products in their operations during the period of the infringement. The judgments (and the ruling of the Court of Appeal and the decision of the Competition Council) detail the significant illicit gains made by the oil companies from these infringements and establish that they were capable of causing significant harm to the public. After the competition authorities' findings were published in 2005, various customers of the oil companies brought claims for damages for the losses caused to them by the oil companies' collusion. By subsequent Supreme Court judgments, damages were awarded, among others, to the Vestmannaeyjar municipality, the City of Reykjavík and Strætó bs. The media have reported that the oil companies paid damages, among others, to Stoðir (on behalf of Flugleiðir), Rio Tinto and 100 individuals (for whom the Consumers' Association acted as a representative body) for the collusion.
The oil companies' offences in question are the most extensive cartel offences to have been uncovered in this country to date. The organised illegal activity of the oil companies continued uninterrupted from at least 1993 until the end of 2001, and the Competition Council's decision details around 500 instances of collusion. In their submissions, the oil companies have placed great emphasis on the fact that the companies' collusion diminished in the latter half of the collusion period. The Appeals Board, agreeing with the Competition Council, found that this was not the case. The Board considered that the collusion had been much more serious, more organised and more frequent during the period 1996-2001 than during the period 1993-1995.
The oil companies' cartel is divided, in broad terms, into three main categories:
Consultation on the pricing of liquid fuels, gas, lubricating oil and related products. The companies held regular consultations on price changes for these oil products. They also colluded to increase mark-ups and boost profits. The companies also co-operated to reduce discounts and impose charges on certain customer groups. These infringements harmed ordinary consumers and businesses.
The oil companies had extensive consultation with each other regarding the making of bids in connection with formal tenders or their customers' price enquiries. Examples of victims of this collusion by the oil companies included the City of Reykjavík, Síminn, the Coast Guard, Icelandair (Flugleiðir), Flugfélag Íslands, the Ministry of Justice, and the Vestmannaeyjar municipality. This collusion was intended, among other things, to prevent customers from securing more favourable prices through tenders.
The oil companies took various measures to allocate the market for oil products in Iceland among themselves. The measures were aimed at allocating the market among the companies by geographical area, customer, after-sales service and volume. The companies, for example, reached an agreement for Skeljungur to have exclusive petrol sales in Grindavík, and they shared business, for instance, in Ísafjörður and Stykkishólmur. They also shared sales to large customers, such as the Straumsvík aluminium smelter and SR-Mjöl. They did this without the knowledge of the customers concerned.
To carry out this consultation, the oil companies had frequent and organised communications with each other. The oil companies' managers participated in meetings; for instance, the companies' chief executives frequently met to organise and make decisions on matters that were part of the illegal collusion. Messages and information concerning the collusion were also exchanged by email, telephone calls or fax. The companies were fully aware that this was illegal conduct, as the case file contained instructions for secrecy and the destruction of evidence.
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