The Competition Authority has been investigating alleged infringements by Eimskip and Samskip hf. (and related companies) of Article 10 of the Competition Act and Article 53 of the EEA Agreement. The investigation covers the companies' conduct in the markets for sea freight, land transport, freight forwarding and related services. The main period under investigation is 2008–2013.
As stated in a press release of 9 June 2021, Eimskip approached the Competition Authority and requested formal discussions on whether it was possible, pursuant to Article 17 f of the Competition Act, to conclude the Authority's investigation into the company's infringements by way of a settlement. That provision of the Competition Act states that if a company has breached the provisions of the Act, the Competition Authority is authorised to conclude the case by way of a settlement. Companies may request settlement negotiations at any stage of an investigation, in accordance with Article 22 of the Rules of Procedure No. 880/2005 of the Competition Authority. The Competition Authority agreed to commence formal negotiations with Eimskip.
Eimskip and the Competition Authority have today signed Settlement of the case but it entails that Eimskip acknowledges serious breaches of competition law, pays a fine of 1,500,000,000 króna, and commits to taking measures to prevent a recurrence of the breaches.
Serious consultation breaches acknowledged
The settlement entails Eimskip's admission of serious infringements of Article 10 of the Competition Act and Article 53 of the EEA Agreement. Specifically, Eimskip acknowledges that the serious infringements consisted of the following measures taken during the main investigation period, following the meeting between Eimskip and Samskip on 6 June 2008:
Eimskip also acknowledges that certain illegal collusion with Samskip took place prior to the companies' meeting on 6 June 2008. However, that collusion was of a smaller scale than the collusion that began after the said meeting. It included, amongst other things, land transport in North Iceland and consultation on sea freight between Iceland and North America when an exemption from Article 10 of the Competition Act was not in force.
In addition, Eimskip acknowledges having breached Article 19 of the Competition Act by failing to provide necessary or correct information or to submit documents for the purposes of the Competition Authority's investigation.
Working to prevent reoffending
The settlement also includes Eimskip's commitment to take measures to prevent further infringements and to promote competition.
This includes, amongst other things, that Eimskip will ensure that effective internal controls and training are always in place to prevent breaches of competition law from recurring. In this regard, Eimskip will pay particular attention to ensuring that its management and key employees are made aware of the stringent requirements for the competitive independence of companies operating in oligopolistic markets and the strict prohibition on any form of communication with board members, directors or other employees of competitors or potential competitors which are liable to distort competition.
Eimskip commits to reviewing all its contracts with other transport companies with regard to competition law. Furthermore, Eimskip undertakes to cease all business cooperation with Samskip. This also entails that Eimskip undertakes not to cooperate with other companies in any form of transport service if Samskip also cooperates with the respective company. This does not apply if Eimskip can demonstrate to the Competition Authority that the nature of the cooperation in question is such that there is no risk of distorting competition between Eimskip and Samskip.
Eimskip pays a fine
The settlement provides that Eimskip will pay a government fine of 1,500,000,000 kr. for the aforementioned breaches. The fine will be paid into the state treasury. In determining the fine, regard is had, inter alia, to the fact that a company which comes forward, admits serious infringements and commits to taking measures to prevent further infringements and to strengthen competition, may, under competition law, be subject to a lower fine than would otherwise be the case.
Samskip incident still under investigation
With the signing of the settlement, the Competition Authority's investigation into Eimskip has concluded. However, Samskipa's alleged violations are still under investigation by the Competition Authority.
Background information
The Competition Authority received tips about alleged breaches by Eimskip and Samskip from both customers and competitors of the companies. Following this, the Competition Authority launched an investigation with raids on the companies in September 2013. A further search was carried out in June 2014.
The Competition Authority has since had Eimskip's potential breaches under continuous investigation. The scale of the investigation, including the underlying volume of data, is unprecedented in the investigation of competition matters in this country. It is well established in competition law that the investigation of extensive and, where applicable, complex infringement cases is, by its very nature, time-consuming. This is due, in particular, to the work involved in establishing the facts of the case and exercising the rights that companies enjoy under administrative law, the potential delay by companies in providing adequate information and in mounting a defence before the appeals board and the courts if companies challenge aspects of the proceedings.
This case has been given priority by the Competition Authority from the outset. In the course of the proceedings, the Competition Authority has given Eimskip and Samskip the opportunity to comment on its detailed preliminary assessment, as the Authority safeguards the right of companies to be heard in cases of this nature by issuing a so-called notice of objections. Article 17 of Regulation No 880/2005 on the procedure of the Competition Authority states that in an objection statement „The main events of the case shall be described and the basis for it reported in outline, that certain circumstances or conduct may contravene the provisions of competition law..The first notice of objection was served on the companies in June 2018, and Eimskip and Samskip were invited to submit comments and observations. The second notice of objection was served on the companies in December 2019. Comments from both companies on the objections were received by 31 August 2020. Both companies denied having infringed Article 10 of the Competition Act and Article 53 of the EEA Agreement.
By virtue of the settlement, Eimskip's previous position that no breach had occurred is, by its very nature, no longer relevant to the resolution of the matter.
According to Article 17(f) of the Competition Act, a settlement is binding on the company concerned once it has confirmed its terms with its signature. As Eimskip has signed the settlement, the Competition Authority's investigation into the company's infringements of Article 10 of the Competition Act, Article 19 of the Act and Article 53 of the EEA Agreement. As previously stated, Samskip's alleged infringements are still under investigation by the Competition Authority.
"*" indicates required fields
