The Competition Council imposes a fine on Landssíma Íslands hf. for the company's abuse of its dominant market position.

The Competition Council has concluded that the agreement between Landssími Íslands and the City of Hafnarfjörður for telephone and data transmission services constitutes a serious breach of competition law by Landssími. By entering into the agreement, the company abused its dominant market position. The Competition Council has ordered Landssíminn to pay a fine of 40 million króna to the state treasury for this breach. Following amendments to the Competition Act which came into force a year ago, the general principle is that administrative fines should be imposed on companies that breach the prohibitions of the Competition Act.

Last autumn, negotiations took place between Landssíminn and the City of Hafnarfjörður regarding telephone and data transmission services for the city. The telecommunications company Títan hf. was interested in this project and requested to be allowed to submit a bid for the work. On 12 December, Títan submitted a bid, but the council decided to accept Landssíminn's bid, and a contract to that effect was signed on 28 December 2000. Títan submitted a complaint to the competition authorities, claiming that Landssíminn had breached competition law with this agreement.

The Competition Council finds in its decision that the evidence in the case clearly indicates that Landssíminn abused its dominant market position by entering into the agreement with the City of Hafnarfjörður. The company had secured this business through improper means, thereby harming the position of its competitors. The agreement, among other things, prohibited the City of Hafnarfjörður from contracting with anyone other than Landssíminn for telephone and data transmission services during the term of the contract. Such exclusive clauses in an agreement by a dominant undertaking constitute a clear breach of competition law. It has a detrimental effect when companies such as Landssíminn attempt in this way to keep their competitors out of the market. Competition in the telecommunications market is limited due to Landssíminn's dominant position, and any further hindrance to competition through Landssíminn's conduct is unacceptable and contrary to the interests of consumers.

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