A review of dominance in Brimi

Following media coverage of the Competition Authority's investigation into its dominance in Brimi, the Authority considers it appropriate, in the interests of an informed debate, to make the following statement:

• In resolving merger cases, questions may arise as to whether a position of control has been established in a particular undertaking. If an undertaking which is under the control of a person acquires control of another undertaking, a merger is deemed to have taken place for the purposes of competition law. If the turnover of the undertakings concerned meets certain financial thresholds, competition law stipulates that the merger must be notified to the Competition Authority before it takes effect, so that the authority can assess whether the merger harms competition and requires intervention in accordance with competition law.
• In competition law, the assessment of dominance in a straightforward case is aimed at establishing who or which entity can, in practice, exert decisive influence over a company's decisions and business strategy. The assessment therefore does not depend on specific shareholdings alone; rather, various other factors can influence the assessment, such as contractual obligations, attendance at shareholders' meetings, a shared business history, family ties and other factors that reveal where control actually lies.
• It is now being examined whether a takeover of Brim has taken place, which should have been notified to the Competition Authority in accordance with the law before it was implemented. Specifically, the Authority is considering whether Útgerðarfélag Reykjavíkur hf., Fiskitangi ehf., KG Fiskverkun ehf. and FISK-Seafood eignarhaldsfélag (now RE-13 ehf.) have acquired a controlling position in Brimi. The authority is required to gather further evidence and to give all parties to the case the fullest opportunity to present their explanations and viewpoints. It is not possible to predict the final outcome of the case until this investigation has been completed.
• The review began as part of an investigation into Brim's acquisition of Fiskvinnslan Kambi hf. and Grábrók ehf. Brim notified the acquisition and the authority took a position on the matter within the statutory deadlines. In the case, the Competition Authority argued that Útgerðarfélag Reykjavíkur and its related parties would gain control of Brim. The merging parties disputed the Authority's assessment. In order to be able to take a position on the acquisition of Kambi and Grábrók, the authority examined whether they would have an adverse effect on competition, based on the aforementioned control over Brim. The conclusion was that this was not the case, and therefore there was no reason to object to the acquisition, whether or not the control was considered to exist, see decision no. 19/2020.
• Control of Brim was also under consideration in connection with Brim's (then HB Granda's) acquisition of Ögurvík in 2018, see decision no. 30/2018. At that time, based on the available evidence and in the face of the companies' categorical denials, there was no basis for concluding that Útgerðarfélag Reykjavíkur had acquired control of Brim. However, it was noted that the matter might be reconsidered if further indications of control emerged. Such indications have now emerged.
• Should the Competition Authority conclude in its investigation that the aforementioned control has been established in Brim, it must further determine whether the parties in question were required to notify the acquisition of control in a formal merger proceeding and whether their failure to do so warrants sanctions under ...under competition law, as the statutory notification obligation for companies regarding changes in control is an important part of the Competition Authority's merger control. If the conclusion is that a notifiable merger has arisen, it must then be subject to a substantive assessment.
• The purpose of the merger rules in competition law is, among other things, to counteract harmful market concentration, which can harm the interests of customers, competitors and the public. Competition can, for example, be harmed if a dominant position is created or strengthened. Fisheries companies operate in a variety of markets, including the markets for the trading of quota rights, specific types of fishing, the processing of seafood, fish markets, the export of products, etc. Concentration in various of these markets can have detrimental consequences for the Icelandic public and the economy.
• Following the coverage in Kastljós on 7 May, the Competition Authority would like to state that it has not demanded that Guðmundur Kristjánsson step down as CEO of Brim. The Competition Authority is to determine whether a change of control has occurred in Brim, and if so, what its effects on competition are.
• The substantive competition law rules on merger control are modelled on the merger rules applicable in the European Economic Area. For the assessment of dominance and the arrangement of investigations, the Competition Authority refers to

  well-established precedents of other competition authorities in the region.