The Competition Authority has launched a formal investigation into Landsvirkjun, examining whether certain provisions in the company's contracts with large consumers comply with competition law and the competition rules of the EEA Agreement. The provision in question concerns clauses in Landsvirkjun's contracts with large consumers which stipulate that they are not permitted to sell unused electricity back into the grid.
Restrictions of this kind, by a dominant undertaking, may constitute an infringement of the prohibition on the abuse of a dominant position under Article 11 of the Competition Act and Article 54 of the EEA Agreement. Such contractual provisions can therefore be designed to protect or strengthen the position of the dominant undertaking at the expense of its customers and the public. In competition cases abroad, such resale restrictions by dominant electricity companies have been considered to reduce the efficiency of wholesale electricity markets, leading to less competition and electricity security. Contractual provisions that contravene competition law are considered void, pursuant to Article 33(1) of the Competition Act.
The matter originated from a letter from the Competition Authority to Landsvirkjun dated 23 November 2023, in which Landsvirkjun was requested to provide information regarding the provisions in question. Subsequently, in a letter dated 9 February 2024, Landsvirkjun was notified that the Competition Authority had decided to investigate the said provisions and their competitive effects.
The Competition Authority has also informed the EFTA Surveillance Authority (ESA) of the opening of the case, in accordance with the obligations resting on competition authorities in the EEA area. In previous cases, the ESA has not assessed whether the agreements between Landsvirkjun and large consumers contain provisions that breach the competition rules of the EEA Agreement.
In an investigation of this kind, the relevant market is defined and the position of the company in question is assessed. If the company is considered to have a dominant position, it is then determined whether an infringement has occurred. If the Authority considers that an enforcement decision may be taken, the company under investigation is served with a so-called statement of objections, which sets out the Authority's preliminary assessment and gives the company the opportunity to submit detailed observations, before a decision is made. A notification of the start of proceedings is part of the Competition Authority's procedure, but it contains neither a final position on the possible infringements nor an indication of the investigation's likely outcome. The investigation into this matter is at an early stage.
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