A report in Morgunblaðið and on mbl.is today states that the owners of Gunnar ehf. and KS have decided not to appeal the Competition Authority's decision to annul KS's acquisition of Gunnar. The report quotes statements from the lawyer for Gunnar on the one hand, and for KS on the other. The Competition Authority's handling of the case is, among other things, criticised. In light of this, it is necessary to make the following statement:
The article incorrectly states that the merger was annulled nine months after it was announced. The correct version is that a completed merger notification was received by the Competition Authority on 19 July 2022. Such a notification is a prerequisite for a formal merger investigation. A decision on annulment was taken on 26 January 2023. The watchdog's investigation therefore did not take nine months.
It should then be noted that the initial findings of the Competition Authority in the matter were available in early October 2022. A status conference was then held in the matter, where the Competition Authority presented its preliminary assessment of the merger to the parties, stating that the merger would have a detrimental effect on competition and could not proceed as it stood.
The merger parties decided, as is their right, to object to the regulator's preliminary assessment and to maintain their notification. They went further than that, however, and amended, amongst other things, their previous position on market definitions and the restraint that might arise from other product types and types of sauces. Previously, the merging parties had essentially relied on precedents from EU law, as had the Competition Authority, but now considered that the circumstances in the Icelandic market, such as potential consumer behaviour, needed to be examined specifically. This called for further investigation by the regulator.
During the investigation of the case, the merging parties requested that a 20-day extension of time be granted, to allow the merging parties themselves the opportunity to present further views and, in particular, to conduct a dedicated consumer survey in December at the request of the parties in the final stages of the investigation. The Competition Authority acceded to that request.
The report quotes Gunnar's lawyer as saying that in neighbouring countries, companies can „get a decision in such a case within a few weeks“. It should be noted that the investigation of merger cases is subject to statutory deadlines, which are the same as those that apply in EEA/EU law. The final duration of the proceedings is then determined, among other things, by the potential harmful effects of the merger and the complexity of the case. Last year, in 2022, the Competition Authority concluded numerous merger cases in the first phase within a few weeks, as the merging parties were not close competitors.
Finally, it is worth remembering that the National Audit Office recently carried out a performance audit of the Competition Authority, the findings of which were published in August 2022. It stated, among other things, the following:„In the opinion of the National Audit Office, it does not appear that during the period 2018-2020 the processing time for merger cases was unreasonably long, or that persistent weaknesses in their handling undermined the efficiency, effectiveness and economy of the operation.“
The report, however, contains various recommendations and suggestions for the regulator aimed at strengthening its operations, including the investigation of merger cases. Information on the administrative review and the regulator's response can be found on a dedicated information page on its homepage.
A general description of merger investigations can also be accessed here.
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