In today's Market section of Fréttablaðið, the appointment of lawyer Ludvig Bergvinsson as a monitor (expert) for the implementation of a settlement reached by N1 hf. (now Festi hf.) with the Competition Authority over its acquisition of Festi is discussed.
The article claims that Ludwig was appointed „at the request of the Competition Authority, which had opposed the clubs“ proposal for another man for the job“. It is also suggested that the reason is that the lawyer is a good friend of the Deputy Director-General of the Competition Authority.
On this occasion, it is appropriate to draw attention to the fact that on 31 August 2018, Festi published News on Nasdaq Iceland – Stock Exchange, which reports on the appointment of an expert. It states that on 9 August 2018 the CEO of N1 appointed „three individuals whom the association considered qualified to act as the independent expert. Following a suitability assessment, the Competition Authority agreed that Lúðvík Bergvinsson should be appointed as the independent expert.“ It is therefore clear that the Fréttablaðið is not correct on this matter.
Furthermore, it is appropriate to note that during the aforementioned suitability assessment, it was revealed that the two individuals nominated by the company had connections to the company, its competitors or the markets in which it operates, which were considered to create a doubt about their independence in relation to at least certain tasks falling within the scope of the work of an expert. It should also be noted that the Deputy Director-General of the Competition Authority was not involved in the aforementioned assessment of competence.
About the supervisory/skilled personnel, their tasks and cost containment
The Fréttablaðið article also discusses the work of skilled professionals and its associated costs. In light of this coverage, it is considered appropriate to shed more light on the work of skilled professionals and the oversight of their work.
Both domestic and foreign competition law provides for the possibility of concluding competition investigations through a settlement with the parties to the case. In merger cases, such settlements involve making specific changes to the transaction in question, with the aim of preventing the negative competitive effects that would otherwise result from the merger. To facilitate compliance with such conditions, in some cases, particularly in larger or more complex matters, a special monitor (an expert or a vendor) is appointed. Such an expert's role is to ensure that the company in question implements the conditions it has agreed to comply with. In extensive competition cases, special monitoring committees have also been appointed to enforce conditions proposed by the companies concerned. There is a significant public interest in companies complying with conditions of this nature.
The appointment of experts or supervisory committees does not constitute a transfer of the functions or duties of the relevant competition authority, rather, it involves the relevant party having the task of ensuring that the company concerned takes the measures it has promised to take in a timely manner, and also of examining possible complaints and other matters that call for special consideration. He is often in a position to resolve issues that arise, as well as complaints from competitors and customers, more swiftly than the competition authorities are able to. Thus, the appointment of a monitor can lead to considerable benefits for both the company in question and the competition authorities. Furthermore, as previously stated, it further ensures that, for example, corporate mergers do not cause harm to the public.
Finally, it is important to bear in mind that competition authorities generally do not take the initiative to propose a settlement or impose conditions in competition cases. Thus, it is always the choice of the company concerned whether to accept the competition authorities' preliminary assessment, for example, of the impact of a merger on competition and to propose conditions to address that preliminary assessment. The same applies to provisions for a monitor, but the final assessment of the need for such monitoring is in the hands of the competition authorities. Usually, the relevant expert or panel members are proposed by the company but appointed by the competition authorities.
In all cases, the company in question, which submitted proposals for the conditions and referred the matter to the relevant supervisory authority, bears the cost of the expert's work.
The Competition Authority is committed to ensuring that the monitoring of settlements is effective and efficient, and has issued guidance to the relevant companies accordingly. Regarding the costs of the work of the aforementioned monitors, the Competition Authority has instructed the companies to exercise comparable oversight over this aspect, as they do in the case of other external consultants they engage. This was emphasised, amongst other things, in a specific letter sent between November 2019 and February 2020 to those companies that have an expert or a supervisory board. The text of the letters is available here.
Finally, it should be emphasised that if a company is dissatisfied with the decisions of the competition authorities in matters concerning supervisory bodies, it can seek redress before the Competition Appeals Board and, where applicable, before the courts, see e.g. the decision of the Competition Appeals Board in case no. 5/2019, Festi hf. v. The Competition Authority.
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