The Competition Authority has had to
merger investigation concerning Ardian France's acquisition of Míla from Síman. Míla operates infrastructure
telecommunications throughout Iceland and is the biggest and most important
A wholesaler of telecommunications services in this country. Síminn is the most powerful retailer of telecommunications services.
and is therefore the largest buyer of wholesale telecommunications services. Much
It is therefore in the interests of consumers and the business community that the sale of Míla by Síminn is carried out.
in such a way that it does not distort competition in the important markets concerned
to play chess.
The Competition Authority believes that the changed ownership of Míla and the break-up
that the asset ties with Símann are a positive step for competition in
telecommunications markets. However, alongside the sale of Míla, a long-term agreement was made
a wholesale agreement between Síminn and Míla which involved competition-restrictive barriers, which
There are no precedents for this. Then, telecommunications systems and wholesale operations were transferred.
from Símanum to Míla in the run-up to the sale which strengthened Míla's position. Called
These matters are subject to action by the Competition Authority.
With a settlement with the merger partners, which was signed today,
The Competition Authority approves Ardian's acquisition of Míla. This entails
The merger parties have made significant changes to the wholesale agreement between Síminn and Míla.
Míla is also committed to adhering to certain conditions in its operations.
In parallel, Síminn has signed a declaration in which the company guarantees certain
aspects of its operations. Under these conditions, barriers to competition are removed.
a level playing field and fertile ground created for vigorous competition in the telecommunications market –
for the benefit of customers and consumers.
Páll Gunnar Pálsson, Director-General of the Competition Authority:
„Competition in development
and the operation of infrastructure here in the country has placed Iceland at the forefront in this area.
stage. In the times of transition ahead, it will be of decisive importance.
For the competitiveness of Iceland, it is essential that the government and business life foster competition.
in this field.
The entry of an independent infrastructure investor into
The Icelandic market and the severing of the ownership ties between Síminn and Míla are intended to
Competition can be relied upon if matters are handled properly. For this to be the case,
the terms and conditions of the transaction support competition. The agreement as set out herein
is presented, intended to ensure that.“
With the above-mentioned changes to
Under the wholesale agreement between Síman and Míla, Síman is guaranteed increased freedom to own
trading with Míla's competitors, which is intended to stimulate competition.
As is well known, there are strong business ties between Síminn and Míla, partly due to
transfer of systems and services from Síminn to Míla in the run-up to the sale.
With this in mind, Míla has committed
to refrain from taking any action that restricts the Sim's freedom in this regard
search. Also, Síminn has signed a declaration in which it guarantees, among other things, that
the company will at all times have the capacity to purchase telecommunications services
from Míla's competitors.
In addition to the traditional supervision of the Competition Authority
An independent monitor will be appointed on the basis of the settlement, whose task is to
to have ongoing and active supervision of the fulfilment of all the conditions of the settlement
Followed up.
The Competition Authority is of the opinion that the above-mentioned
amendments to the wholesale agreement and conditions resting on the merger parties shall render them void
restraints on competition that the sale would otherwise have created.
Without these changes and conditions, a dominant market position would have been established.
Míla's position in certain areas strengthened significantly and the terms of the sale were uncompetitive.
the maintenance of Síminn and other telecommunications companies. Had these restrictions on competition
that, unless changed, no competitive advantage will be gained from terminating the ownership ties
Of Síman and Míla.
Alongside the investigation of the case, the competitive prospects and
The likely future environment for telecommunications in this country has changed considerably. Thus, Míla's competitors in
Infrastructure and wholesale operations: agreements reached and/or announcements made regarding development and strengthening.
data transmission in this country, particularly in the backbone market. When assessing
the competitive effects of Ardian's acquisition of Míla are taken into account
predictable changes of this kind.
The detailed grounds for this decision of the Competition Authority in
The matter will be published shortly.
The Competition Authority's settlement with Ardian and Míla is available here.
The statement from Síminn is available. here.
Below you will find further information about the study.,
the assessment of the supervisory authority, market conditions and more. Will be added
to provide this information as and when the occasion arises.
Merger rules
are one of the cornerstones of competition law and play an important role in
to prevent the long-term change to a more competitive type of market
resulting in the elimination or restriction of competition through merger or acquisition.
Competition law
to grant the Competition Authority (CA) the power to annul mergers or impose conditions on them
conditions if the authority considers that a merger hinders effective competition by
a dominant market position is created or such a position is strengthened, or results in
that competition in the market is otherwise significantly distorted.
Merger case
are different from other administrative cases in that statutory time limits apply to
their operation. Are these time limits set for the benefit of, among others, the person concerned?
company. These provisions mean that the SE shall notify them within 25 working days.
a party which has submitted a sufficient merger notification, if it considers it necessary
further investigation of the competitive effects of mergers. A decision on mergers shall
pursuant to competition law, shall be submitted no later than 90 working days after
The above notification has been sent to the party that notified the merger.
If merger parties who request settlement talks with the SE submit possible
Conditions for mergers on the 55th working day of the investigation or later, are extended
the period for investigation is automatically extended by 15 working days. If the merger parties so request
the institution is authorised to extend the above-mentioned deadlines for merger investigations
up to 20 working days. If SE does not comply with the above time limits, SE cannot
annul the merger or impose conditions on it.
South East
tries to conduct its investigations as thoroughly as possible within the time limits laid down by law
permit. The SE does this, among other things, by sending merger parties objection documents where
The supervisory authority's preliminary opinion is described. This provides the merger parties with greater certainty.
Right of objection, but arising from administrative law.
According to
Under competition law, merging companies can request talks with
The Competition Authority, if they consider it possible to resolve competition problems that
arise from a merger with the imposition of conditions to protect competition. In Article 15 of the rules
Regarding the merger notification, it is stated that its premise „to conclude the matter with an agreement is
that the merger parties request settlement talks with the Competition Authority and submit
present comprehensive proposals for conditions intended to be adequately resolved
avoid potential competition problems that would otherwise arise from a merger.“
Previously
but formal merger clearance talks between the Competition Authority and the merger parties begin
they sign a declaration stating that they are aware of them
the legal effects which an agreement settling the conditions for a merger has
see.
The person concerned
Companies assess for themselves whether it is in their interests to request
conciliation talks with the SE. If companies fundamentally disagree with the preliminary assessment
In a response document, they always have the option of not requesting conciliation talks.
and protect their interests in the traditional SE procedure. If companies are then
Those who disagree with the final decision of the SE may subsequently challenge it before
the Competition Appeal Tribunal and the courts.
The phone is
today the parent company of Míla. Predecessors of Síminn and Míla (Landssími Íslands/Póst- og
the telephone company) had a monopoly on telecommunications operations for decades and
They built a vast and powerful telecommunications network in the shelter of that situation. Competition
in telecommunications was fully liberalised in 1998 and the Landssíminn was privatised in
in a single case in 2005, i.e. the core system was not separated from the company.
Á
In 2007, significant organisational changes were approved at the annual general meeting of Síminn.
It was agreed that Síminn's telecommunications network (the basic telecommunications system) would be separated.
another activity of the company. A separate company was established for this purpose,
Míla, concerning the operation, development and maintenance of the group's telecommunications network. Furthermore
Another company, Skipti, was established, and ownership stakes in Síminn (and
the company's subsidiaries) and Míla into that company. Urðu became the parent company
Of Síman and Míla.
With
Changes to the group during the year 2015 occurred Mile A subsidiary of Síminn. Operates
The company owns the telecommunications infrastructure throughout Iceland. Míla is in a very strong position in the telecommunications market.
and a systemically very important company. In light of this, Míla is described in the data
the case as „Basic telecommunications service throughout the country“and that
the company runs „The heart of the Icelandic telecommunications infrastructure“. Nothing else
A wholesale company can offer as wide a range of services as Míla.
does. Míla is therefore the largest and most important wholesaler of telecommunications services here on
country.
The phone
is the most powerful retailer of telecommunications services and is therefore the largest buyer of
Wholesale telecommunications service.
South East
has repeatedly investigated the conduct of Síminn, Míla and their predecessors and imposed additional fines
competitive barriers related to the companies. Have those barriers not least
relates to the ownership relationship between Síminn and Míla, see e.g. Decision no. 6/2013 and Decision no. 6/2015.
From
The merger of this matter leads to Ardian to acquire Míla. Is Ardian a powerful French
A fund management company that has invested, among other things, in infrastructure and others
business operations. The implementation of competition law shows that investments
Fund management companies are subject to merger control by the competition authorities where applicable.
An example of this:
From
Since 2013, detailed conditions have been in force, which are intended, among other things, to combat
the anticompetitive effects of the vertical integration resulting from
Telecom's ownership of Míla. These conditions are based on an agreement between Telecom and Míla with the SE.
Was this settlement originally made in 2013? The conditions are intended to ensure separation.
between Síminn and Míla (and the division between Síminn's retail and wholesale operations),
and more importantly, that Míla is an independent wholesale company
telecommunications with independent operation, independent management and independent
a business strategy shaped by the interests of the company and not its owner. Then there are
to ensure competitors of Síminn in the telecommunications market have equal access to systems and
the services of Míla pursuant to the settlement.
The settlement
from 2013 was changed in 2015 due to changes in the Telephone System. In those
The changes involved the merger of Skipti and Síminn under the name Síminn. Míla was created.
as a subsidiary of Síminn. The changes to the agreement were aimed, among other things, at further increasing
and strengthen Míla's independence from Síminn.
Further information on this can be found
approaching in decision
No. 6/2013 and Decision no. 6/2015.
Case
This concerns, not least, competition in telecommunications infrastructure. Such competition serves
including a key role in promoting the rapid development of telecommunications infrastructure and
thereby improving the competitiveness of nations and the standard of living of the general public. In an SE publication number.
1/2020, Cooperation or competition? The development of telecommunications infrastructure, is
This is described in more detail, and the measures in neighbouring countries to strengthen are outlined.
Infrastructure competition in telecommunications.
Í
In February 2021, the OECD Council approved Recommendations to member states where the importance
Competition in telecommunications infrastructure was emphasised.
Much
It is important for consumers and business that the sale of Míla by Síminn is carried out with
in such a way that it does not distort competition in the important markets concerned
to play chess.
Due to
Due to the importance of this matter, the Competition Authority considered it necessary to have close consultation.
with the Communications Authority. It has the statutory task of ensuring secure
telecommunications service and is intended, together with SE, to safeguard competition in
telecommunications. It was also considered important by SE to obtain the views of key customers
and competitors Míla and Síminn. Has the Communications Authority and companies such as Nova,
Sýn, Ljósleiðarinn, Tengir, Hringiðann and Snerpa have repeatedly sent their SE viewpoints.
Part
The viewpoints were published on the Competition Authority's website under a news article about
the status of the matter, date.
9th August 2022.
Summary
These and other reviewers have considered it positive that the relationship would be ended.
ownership ties between Míla and Síminn. On the other hand, Míla is sold in that way
that competition would be seriously distorted. In support of this, among other things.
referred to a wholesale agreement which was to be in force between Míla and Síminn for 20 years and
The transfer of important telecommunications systems from Síminn to Míla in the run-up
the sale which would significantly increase Míla's ability to hamper competition. They called
These consultees repeatedly urged the SE to intervene to ensure that
Ardian's purchase of Míla does not harm competition.
Points of view
The telecommunications authority and the consultees will be given detailed consideration in the decision's reasoning.
which will be published soon.
To
In a previous extensive investigation, the Competition Authority sent Ardian and
Telephone rebuttal document (114 pages), 1 July 2022. It presents a detailed preliminary assessment.
on the competitive effects of the sale on Míla. The preliminary assessment was, inter alia, laid down as the basis.
in talks about a settlement in the matter, which Ardian requested following the publication
of the letter of objection.
Í
The preliminary assessment indicates that it can be assumed in advance that wear on
that the ownership links between Síminn and Míla are, as such, positive from a competitive perspective
consideration. However, other matters related to the sale of Míla will lead to it
distort competition and call for intervention in accordance with competition law.
Important
Factors in the Competition Authority's assessment included, among others, the following:
Míla's market strength
and Síman
The Competition Authority
believes that the position of Míla and also Símans is very strong in the markets concerned and that there is market concentration.
They are significant. This was of great importance when assessing potential harmful effects.
of the merger, mainly due to the wholesale agreement on the one hand, and due to stronger
and Míla's improved position in expanded telecommunications operations following the sale, however.
Mile
is a wholesale company in the telecommunications market and its core business consists of
the company's in building and operating telecommunications infrastructure and systems on
nationwide, for the production of telecommunications services. These infrastructure are in the first
lay down trunk lines that go all the way around the country and far and wide through various
territory. Also lease lines connecting the country's settlements and mobile phone masts to
the main lines and then the service lines connecting homes, businesses and institutions in
access network to the access network (feeder lines and leased lines) either through copper or
fibre-optic cables. In addition to this, Míla operates, among other things, mobile networks and
international telecommunications connections via submarine cables. Finally, Míla operates another inactive
telecommunications infrastructure, including towers, masts and buildings that serve and house
active telecommunications equipment, as well as other related services.
Í
In this matter, the following wholesale markets have been defined as Míla
operates and these definitions take into account previous precedents both in competition-
and telecommunications authorities concerning telecommunications infrastructure operations, both here and
domestic and international markets. Markets in which Míla operates and which are of significant importance in
The matter was described as follows in the response document, and the share is based on the year 2021:
i.
A wholesale market for home wiring (both via
copper and fibre-optic). Míla's share was 50-55%.
second.
Wholesale market for bitstream connections
(both copper and fibre-optic). Míla's share was 65-70%.
three.
Market for sealing components of rental lines in
wholesale. Míla's share was 70-75%.
iv. Market
for wholesale rental line access. Míla's share was 65-70%.
v. Market for the rental of facilities on passive infrastructure. Míla's share was 40-45%.
vi. Market for the leasing of facilities on active infrastructure
for mobile networks. Míla's share was 60-65%.
vi. Market for international connections. Míla's share
was 40-45%.
To
In the opinion of the Competition Authority, there are also arguments for defining the comprehensive whole together.
market for specialised data transmission, i.e. all domestic data transmission,
home-brew and a bitstream which is in fact the sum of the first four lines in
the table and Míla's share is based on that at 60-65%. All these markets
is also characterised by high concentration. It is then clear that Míla possesses great
breadth of service offering compared with other competitors. Provide these
The information strongly indicates Míla's dominant market position.
Main
Míla's competitor in the infrastructure competition is Ljósleiðarinn (formerly Gagnaveita
Reykjavík) which operates the fibre-optic network in the capital region and on the south-west corner
of the country. Does the Fibre Optic have a 30-35% share of the total market for
data transfer compared to 2021. The fibre optic cable has now been allocated
two fibre-optic cables in a ring around the country from the New Year, which enables the company
able to significantly expand its fibre-optic network and offer its services on
nationwide from that time. Other main competitors are Tengir (0-5%) which operates
in Akureyri and Sýn (0-5%), which has operated a single backbone line but will lose it.
Switch to the Fibre Optic network from the New Year.
What
regarding Míla's strong position, it can be added that the Communications Authority has in
A market analysis has designated Míla as a company with significant market power in
wholesale market for feeder lines (feeder line components of leased lines) and termination components
Leased line. Has the authority considered, with regard to the aforementioned market, that Míla was
with a 75-80% share and thereby in a superior position both in terms of turnover and
number of connections. In the latter market, it was estimated that Míla had 65-70%
share by turnover and just over 80% by number of connections
Leasing lines. Based on these market analyses, the Communications Authority has laid
conditions on Míla regarding pricing, equal access for customers, etc. on the basis of
telecommunications law.
Position
The company's position in the retail markets for telecommunications services is also of great significance.
the matter where Míla will continue to serve Símann on the basis of a wholesale agreement. On
In the three main retail markets for telecommunications services, Síminn has the following
share of total revenues in the relevant markets nationwide in 2021:
i.
Internet connections – retail. Síminn's share
was 40-45%.
second.
Mobile network – retail. Síminn's share was
30-35%.
three.
Fixed-line telephone network – retail. Síminn's share
was 60-65%.
Others
Síminn's competitors in these markets are Nova and Sýn. Síminn has the largest
its share in two of these markets, namely, in internet connections and
fixed-line systems. Nova, however, has a higher market share than Síminn in
mobile phone networks or 35-40%.
The wholesale agreement
distorts competition
Wholesale agreement
The agreement concerning Míla and Síman was made in parallel with the agreement on Ardian's acquisition of Míla and was announced.
was that transaction on 23 October 2021. Ardian and Síminn say wholesale agreement
the relationship between Míla and Símans to be an inseparable part of the sale of Míla and, in fact
its premise.
Í
The objection document argues that various serious competitive problems result from
this agreement as it was presented to the Competition Authority during the investigation
of the case:
i.
Exclusive purchase clause: The Contract
provided for the purchase by Síminn of all the main wholesale inputs for telecommunications services to
20+5 year and included exclusive purchasing rights in favour of Míla with respect to Síminn. Would Síminn
long-term tied into business with Míla. At the same time, Míla's competitors would have to
Almost completely excluded from doing business with the largest supplier
telecommunications service in the country. Also, Síminn's ability to negotiate with
other wholesale service providers and thereby provide Míla with very limited competition.
The SE's investigation did not reveal that the provisions in question, such as
They were initially introduced as being necessary for Míla to be able to continue.
development of telecommunications infrastructure.
second.
„English provisions“: According to
Under the agreement, Míla is to be Síma's main supplier but was obliged to inform Míla if
the company received a better offer from other suppliers/network owners so that Míla could
equalised offer. If Míla were to make a better or equally good offer, Síminn should direct
the transaction to Míla, but if not, Tæknifyrirtækið Síminn would be permitted to trade with a third party
the party. This concerns the so-called „English provisions“ which can have the same harmful effects
and exclusive purchase provisions, especially when the seller is dominant. Provisions of
This can also facilitate the coordination of competitors when the seller
The relevant service operates in a market with limited competition.
three.
Competition bansIn
The contract contained provisions which involved competition restrictions. They were in
primarily intended to prevent Síminn from competing with Míla in the wholesale market and
Míla competed with Síminn in retail. Would these competition bans apply for at least 20 years?
Competition bans can be a normal part of corporate acquisitions.
to ensure, among other things, that the value of the goods sold is actually transferred to the buyers.
However, competition bans must not go further than is necessary and it is generally accepted that
it is laid down that they cannot be valid for longer than three years except in absolute
exceptional circumstances. The objection document sets out the reasoning for that assessment
The Competition Authority found that Ardian had not demonstrated the necessity of these provisions in
the wholesale agreement, as they were originally presented.
fourth.
Provisions on wholesale prices:
According to the agreement, the price of Míla, which is not subject to regulated pricing
Telecommunications authority, only changes in accordance with agreements and in line with the index
of consumer prices. The submission points out that competitive pressure in infrastructure and
Wholesale services, along with technological development over recent decades, have contributed to lower prices.
If the unit price of telecommunications has fallen considerably over the past few decades, or in any case
a fall that rises considerably less than the general price level here, which is used as an index
consumption price reflects. Hence, a possible benefit of continued
technology development and e.a. competition are channelled in full or to a large extent directly to Míla,
instead of being reflected in the company's lower wholesale price to Síminn and thereafter
incidents to other domestic telecommunications service retailers, which should, through active
competition to lead to lower prices for consumers. This initial assessment was based on, among other things.
provided that the other provisions of the original agreement remained unchanged.
and so on. Provisions for close cooperation between Míla and Síminn: Í
The objection document therefore describes the wholesale agreement as creating strong economic
a long-term relationship between Síminn and Míla. In addition, the contracts stipulated
for special joint committees („steering committee“and „strategic
committee“) which would bind Símann and Míla in close vertical bonds with a close
cooperation and consultation on commercial decisions in the telecommunications market, as well as
investment and development. It was argued that this would further increase harmful
The impact of the wholesale agreement.
and so on. The wholesale agreement is unprecedented:
Ardian based its argument on the sale of Míla being in line with international developments and the original
a wholesale agreement would be in line with what is customary in comparable
business. The SE's investigation has revealed otherwise.
In telecommunications, passive („dead“) infrastructure is discussed (e.g.
structures, towers, buildings, pipes and pipelines) and active infrastructure (production of
telecommunications service, such as equipment and apparatus that send and receive
telecommunications signals). It is quite common abroad for telecommunications companies to have sold
inefficient infrastructure to companies that specialise in the operation of such assets (sometimes
reference to network operators in the case of mobile networks, for example). The relevant telecommunications company
then leases premises from the tower association for its active infrastructure. Such
Transactions have taken place in this country, see the decision of the Competition Authority.
No. 32/2021, which dealt with Digital Bridge's acquisition of passive telecommunications infrastructure
Sýnar and Nova.
The sale of Míla, however, involves the sale of both active and
inactive infrastructure. The case file shows that Síminn's foreign consultants pointed out that
Such a sale would be highly unusual and would require special education for potential
to buyers.
Market leader
Míla's position strengthens
In the run-up to the sale of Míla, important
Telecommunications systems and related wholesale operations were transferred from Síminn to Míla. It lies
that Ardian would not have been interested in the acquisition if Míla had not been involved
over these systems. In the objection document, it is argued that this transfer of
systems have strengthened Míla's dominant market position, and put the company in a new and better
position to lay a stumbling block in a competitor's path and harm competition. With
With expanded operations and an increased range of services, Míla has even greater capacity and incentive.
to exclude or weaken their competitors.
„Backbone alliance“ and weakening of
Infrastructure competition
In the reports of the consultants to Síminn and Ardian, there is
to discuss the so-called basic mechanism of the alliance („backbone alliance“) and effects
the status of Míla after the company has been sold off from Síminn. This involves
essentially that two competitors of Símen and Míla (Sýn and Nova) reduce or
to cease operating its own telecommunications infrastructure and instead purchase the relevant one
service, particularly from Míla. It is assumed that this will improve Míla's position on
the market has strengthened significantly. With reference, inter alia, to this, the rebuttal document argues
that the sale of Míla creates a risk of harmful coordinated behaviour by competitors which could, among other things,.
seriously distorted infrastructure competition.
Not
Demonstrated optimisation
Í
The objection document states that Ardian has not demonstrated with sufficient
that any potential benefits would offset the likely harmful effects of the merger, or that
that there is a reason to take into account optimisation arguments when assessing the impact
of the merger.
Í
The SE objection document described the merger, including those transactions and those
changes to Míla which belonged to him, led to a stronger position for Míla; not
only in markets where the company was dominant rather than
The merger remaining unchanged also led to a broader vertical position in
telecommunications markets and indeed a new market position that would have made Míla even better
able to exclude its competitors and transfer competitive strength from one market
otherwise, the purchase would be left unchallenged. In connection with this, there were plans in documents from
to advisers to Telenor and Ardian on core systems
alliance („backbone alliance“) and its effect on Míla's position after
The company has been sold off from Síminn. These plans involved Sýn and Nova)
would reduce or cease the operation of their own telecommunications infrastructure and buy it in
site of the relevant service, in particular by Míla. It was taken as a basis that by this
Míla's market position would be significantly strengthened.
After the objection document was issued,
Nova declared to the SE that talks with Síminn and Sýn
talks on cooperation in the development of telecommunications infrastructure had not led to a conclusion and
Those talks were dropped and there are no plans to resume them. Nova intends to
operate as an independent competitor and run and develop its own infrastructure in
telecommunications. If Nova has entered into an agreement with Ljósleiðarinn (8 July 2022) for the use of
of that company's fibre-optic cables to build up its own backbone network in order to
to strengthen themselves in competition with Míla in nationwide data transmission.
That
On 5 September 2022, the sale of Sýn's fixed-line network to Ljósleiðarans was reported and
a ten-year service agreement between the companies.
This
events that took place after the publication of the objection document unequivocally indicate
plans for a basic alliance system
will not come to pass.
Around the time the objection was published,
The company signed a contract with the Ministry of Foreign Affairs for its use.
of two of the eight fibre-optic cables in the Atlantic Alliance's cable
(NATO cable), which runs around Iceland and to the Westfjords. Means
this expanded service offering from Ljósleiðarans. In a statement from Nova on 8 July 2022 regarding
The contract with Ljósleiðarinn refers to this and states 'use of'
The nationwide rollout of fibre-optic broadband will further accelerate the development of 5G.
further. It is also said that with this collaboration, Nova is given even further opportunity to
Strengthen the nation's telecommunications connections and accelerate the development of 5G in rural areas.
and then especially in the Westfjords and the North East.
In a statement from Síma
In a stock exchange filing on 5 September 2022, this is said about the agreement with Ljósleiðarinn:„Vision
hf. and Ljósleiðarinn ehf. have today signed an agreement for exclusive negotiations and
the main terms of contracts relating, on the one hand, to the sale of the core network of Sýn hf.
to Ljósleiðarans ehf. and, on the other hand, to a service agreement between the parties for ten years.
years old. […] The intention is for the final agreements to be in place no later than
on 15 December. […] The agreement is subject to funding.,
due diligence and the Competition Authority's final approval of the acquisition and
Service agreements for the business.“
Á
At a meeting with the SE, Sýn confirmed the above, i.e. that the main points had been agreed.
The conditions relating to the Fibre Optic network and, subject to the SE's consent, the reservations
not Sýn but Ljósleiðarinn, i.e. Ljósleiðarinn's feasibility study on
the relevant assets of Símenn and financing.
At the same time
The investigation of the matter therefore has competitive prospects and a likely future environment.
Telecommunications in this country changed considerably after the publication of the protest document. Thus
Míla's competitors in infrastructure and wholesale activities have negotiated and/or announced
officially on the development and strengthening of data transmission in this country, particularly on
infrastructure market. In assessing the competitive effects of Ardian's acquisition of Míla,
taking into account foreseeable changes of this kind.
We
Further investigation following the publication of the objection document revealed indications that
Míla's position in a particular area would not be as strong as was originally intended.
the objection document. This is also taken into account.
From
At the outset of this case, the Competition Authority has considered that a breach of
the ownership relationship between Símenn and Míla would, on its own, be likely to have a positive
impact on competition. However, the sale would have been structured in such a way that it
created serious competitive problems.
Subject
The competition authority, in settlement talks with Ardian, was exploring whether it would be possible to
to resolve this matter in such a way that, on the one hand, the interests of the community from
competition in a very important market and, on the other hand, commercial interests
that those connected to the sale of Míla are adequately secured. If that were to happen, it would be
It is possible to achieve positive changes in the telecommunications market.
With
The conditions set out in the agreement with Ardian have been prevented.
the harmful effects that would otherwise have resulted from the merger. Then, with the sale of Míla
the termination of the largest domestic telecommunications service retailer's ownership of the largest
a wholesale telecommunications company in Iceland. In that respect, the merger has
inevitably entails a positive change in vertically integrated ownership
which has characterised the telecommunications market for years.
Also
It is significant that by reaching a settlement with the Competition Authority, Ardian and Míla
is subject to conditions, not only regarding significant changes to the wholesale agreement
with the largest telecommunications service retailer and former owner of the company, also
various obligations to ensure competition, including a ban on
discrimination and equal access to systems and services, duty to provide information regarding
of the proposed changes, and a ban on anti-competitive concentration and interconnection
with a clear obligation to separate all core services in Míla's operations.
To
In addition to this, the competitive conditions and the likely future environment of telecommunications
Here, matters are developing for the better in parallel with the proceedings and investigation.
The competition authority in recent quarters. Competitors and potential
Míla's competitors have agreed and/or announced extensive measures regarding
its development and expanded operations in data transmission here, particularly in
infrastructure markets. The competition authority naturally looks to such changes, and
support the other measures of the supervision in agreement with the merger parties in this matter.
Investigation
The competition authority's (SE) investigation in this case has been both thorough and
extensive. To provide a comprehensive overview of it and its background
A detailed timeline of hers is published here.
Formal
The investigation began on 8 February 2022, but then the Competition Authority received
a sufficient merger notification. Until then, the Competition Authority could not
Seeking information and evidence in the case.
The other
SE was in contact with the buyer and seller in the run-up.
of the notification. These communications are also detailed below.
Background
SE investigation into Ardian's acquisition of Míla
15.
September 2021Meeting of SE with Ardian and Síman í
The lead-up to the sale of Míla. SE pointed out at the meeting that the changed ownership of Míla
could be positive, but care would have to be taken that the commercial agreements between Síminn and
A mile would not distort competition.
23.
October 2021: It was announced on the stock exchange that Síminn had sold
Ardian Mílu.
1.
November 2021Ardian informed SE in writing that
that the company has bought Míla and that the purchase is subject to the approval of the SE.
Ardian considers that the acquisition does not constitute a notifiable merger as
that the company has no turnover in this country. It was requested that information be provided
whether the SE intended to exercise its statutory power to require notification of the merger
as he would not be required to give prior notice because of the turnover thresholds
would not be fulfilled.
2.
November 2021: In assessing whether a call should be made
a notification, so that the competitive effects of Ardian's acquisition could be assessed
At Míla, SE requested the views of stakeholders. See more notification South East.
Subsequently, views were received from the Communications Authority and 11 telecommunications companies.
Most of these parties encouraged SE to call for a notification from Ardian and
to investigate the effect of the acquisition of Míla on competition.
19.
November 2021SE calls for a merger notification from
Ardian. Featured in notification South East
that despite the fact that positive competitive effects may result from a termination
vertical ownership ties between Síminn and Míla, require„to investigate whether another
Matters related to the merger may lead to harmful effects on competition. For example
The Competition Authority considers it important to review the business relationship
Telefunken and Míla following the merger and its possible effects on the interests of competitors
and competition in the relevant markets.“
22.
December 2021Ardian distinguishes SE from a change of stance towards
duty to report. It had emerged that Ardian had turnover in Iceland and
The acquisition of Míla therefore constituted a notifiable merger.
19.
January 2022SE received a merger notification from Ardian. notification SE from
On 20 January 2022, it was stated that the supervisory authority would assess whether the merger notification
would be sufficient, i.e. whether it contained all the necessary information about
Ardian's acquisition of Míla as stipulated by the rules. It later emerged that the notification
was not sufficient and could therefore not be the basis for initiating an investigation into
the merger.
Investigation
SE begins on 8 February 2022
8.
February 2022: A satisfactory merger notification was received from
Ardian. From this point onwards, deadlines began to expire which the SE is required to comply with under
competition law to investigate mergers.
10.
February 2022: SE initiated a consultation process and gave the Communications Authority,
customers and competitors of Míla and Síminn, and other interested parties, an opportunity to express
regarding the possible effects of Ardian's acquisition of Míla and on the substance
of the merger notification. It was specifically requested that the reviewers
discussed what effect the sale of Míla would have„on competition, about
market definitions, the vertical relationship between Síminn and Míla for the long term
Wholesale agreement after the merger and more“, see letter and notification South East.
February
– June 2022Extensive data collection and SE research
is taking place. The following was, among other things, revealed in this study:
i.
Views on the competitive effects of acquisitions
Ardian's acquisition of Míla was sourced from Nova, Sýn, Ljósleiðaranum, Farice, Snerpu, and Tengi, among others.,
The Ring Road and the Iceland Towers. Most parties considered it positive that the ties would be severed.
vertical ownership ties between Míla and Síminn. On the other hand, it is negative that
that the merger creates formalised commercial relationships with a wholesale agreement between
of the long-term relationship between Síman and Míla, and that the agreement will lock everything in until
60% of all wholesale telecommunications service transactions for the next 20 years to
minimum. Most of these parties put forward substantiated concerns about
competitive conditions in the telecommunications market after the transaction. Furthermore, the Telecommunications Authority
presented detailed views on the harmful effects of the trade and provided the supervisory authority
information that was important to the investigation of the case. Ardian and Síminn expressed
concerning these reviews and objected that the sale of Míla was intended to
distort competition.
second.
SE notified the parties of the merger and
his study would enter phase II on 14 March 2022, as it is necessary to investigate
a closer look at the merger.
three.
SE obtained extensive internal information from
Símanum and Ardian. This data, among other things, describes Míla's extremely strong position on
markets and opportunities for the company's significant growth based on, among other things, a changed
ownership, Míla's new position with an expanded product range and
the wholesale agreement with Símann.
fourth.
Data from Síman and Ardian was discussed.
plans for a very extensive future partnership between telecommunications companies. Is this
mentioned in the documents as possible„Backbone Alliance“It seems to be suggested
It is fundamental that Míla, Síminn, Sýn and Nova will form this data transmission and core infrastructure.
alliance. SE considered it necessary to obtain detailed data on this, as
These plans could have a significant impact on competition in the telecommunications market after
Ardian's takeover of Míla.
Investigation
on the case file, an analysis of the viewpoints of the merging parties and the consultees,
the point of view of the Communications Authority, as well as consultation with foreign sister organisations, led
for the SE to write a statement of objections in the case, but that is done when there are
deemed an intervention. The drafting of a letter of objection is beyond the duty imposed by administrative law and is intended
to give the parties the fullest opportunity to present their points of view
maintenance.
South East
publishes an objection document
1.
July 2022Following a thorough investigation, the SE published to Tæmanum and
Ardian filed an objection and had a meeting with Ardian on the same day regarding the objection.
and the status of the investigation was presented. The rebuttal document (114 pages) describes it.
The regulator's preliminary assessment that Ardian's acquisition of Míla would distort competition and that a remedy was necessary.
intervention to counteract that disorder.
5.
July 2022At Ardian's request, a meeting was held to discuss
the subject of this matter and possible settlement negotiations. In Article 15 of the rules on notification
Samruna says that its premise „to conclude the matter by agreement is to
mergers parties request settlement talks with the Competition Authority and submit
comprehensive proposals for conditions intended to be adequately resolved
possible competition problems that would otherwise arise from a merger.“
7.
July 2022At the request of Síminn, a meeting was held to discuss
the content of the objection document and the investigation of the case.
8.
July 2022At Ardian's request, a second meeting was held to discuss
on the matter and on possible settlement talks.
Ardian
Seeks conciliation talks and puts forward proposals
11.
July 2022Ardian formally requested to begin settlement talks
with SE, which the supervision agreed to do.
15 July 2022Ardian sent SE
proposals intended to solve the competitive problems that were considered
stated in the regulator's statement of objections. In accordance with competition law.
The deadline for the investigation into the merger was then extended by 15 working days.
Comments on the content of the objection document were also received from Ardian and Síminn.
17 July 2022:
A notice from Síminn to the stock exchange, which states, among other things:„On 9 July 2022, Síminn announced
that Ardian had informed that the company had requested conciliation talks with
The Competition Authority. Ardian has submitted proposals for conditions to be met.
the Competition Authority's competition concerns. Today, Ardian informed the press
that it was Ardian's assessment that the proposals the company had put forward
The competition authority regarding changes to the proposed wholesale agreement between
that the changes were burdensome and of such a nature as to involve
adverse effects within the meaning of the parties' purchase agreement. It was Ardian's assessment that if
the merger will be approved by the competition authorities with the existing
conditions, that one of the conditions for the transaction to go through
is not considered to have been fulfilled under the purchase agreement. Ardian has informed that the company
is not prepared to conclude the transaction on the basis of an unchanged
purchase agreement. It is clear from this that Síminn will need to talk to Ardian about
matters relating to the parties' purchase agreement, in parallel with Ardian's discussions with
The Competition Authority.“
The phone
announced on 22 July 2022 that the company and Ardian had reached an agreement on changes to
the purchase agreement regarding Ardian's proposals for the conditions for the acquisition of Míla. In
the changes include, among other things, a reduction of 5 billion króna in the purchase price for Míla and that
that the contract is„subject to Ardian's proposals in respect of
that they are sufficient for the competition authority and that no further action is required.
onerous conditions and/or changes to meet the requirements of the Competition Authority.“
SE market test
Ardian's proposals to the conditions
21 July 2022: SE requested
Comments from the Communications Authority, customers and competitors of Míla on Ardian's proposals
to conditions intended to resolve the competitive problems that would otherwise
derive from the purchase of Míla. Was the request for feedback a part of a market test of the proposed
Ardian's proposals. A review was also requested of the comments made by Ardian.
and Síminn had made amendments to SE's objection document. To facilitate comments from consultees
To present the viewpoints, SE prepared a detailed summary of the supervisory authority's preliminary assessment on
competitive effects of Ardian's acquisition of Míla, see details notification from 21 July
2022.
26 July 2022Settlement meeting
held with Ardian where the company's proposals on the conditions and
whether there were any cases/agreements that were substantially comparable
the wholesale agreement between Míla and Síminn.
9.
August 2022: Views of the consultees and comments from Síminn and
Ardian publishes. Views on Ardian's proposal on conditions and comments.
The objections from Simans and Ardian to the SE objection document were received in late July and early August, among others.
Telecommunications authority, Nova, Sýn, Tengi, Ljósleiðaranum, Farice, Snerpu, Hringiðunni,
Island Towers and Míla. Most of the respondents believed that Ardian's acquisition of Míla would disrupt
that, unchanged, competition and Ardian's proposals on the conditions are insufficient to
to avert those restrictive practices. Nova stated that talks with Síminn and Sýn about a partnership
regarding the development of telecommunications infrastructure had not led to a conclusion and they
Talks were at a standstill and there were no plans to resume them.
South East
gave Ardian and Síminn the opportunity to comment on the above-mentioned reviews.
Comments from Síminn were received. 4th August and Ardian 6th August 2022. In comments
The companies' objections include, among other things, the views of the consultees that Ardian's proposals
are not sufficient to counteract the competition-restricting effects arising from the sale of Míla. All
The aforementioned data were made available on the SE's website and were available to all interested parties.
given until 10 August 2022 to submit further views, see details
notification South East.
9.
August 2022A conciliation meeting was held with Ardian. Ardian was present at the meeting.
informed of the status of the SE's review of the comments submitted by the Communications Authority and
telecommunications companies and the response of Ardian and Síminn to them. It was the main topic
the comments that had been made were discussed in detail, but most of the respondents considered that
Ardian's proposals were not sufficient. The discussion then turned to whether a
would be matters/agreements that were substantially comparable to Míla's wholesale agreement and
The phone's on.
It also emerged at the meeting that SE was fully intent on continuing.
conciliation talks with the aim of finding an acceptable solution to them
competition problems that the regulator had identified. Furthermore, it was repeatedly
that a break in the ownership ties between Síminn and Míla would be positive, but at the same time that it was
the regulator's task is to ensure effective competition in the telecommunications market. In this regard
At this stage, it would be SE's preliminary assessment that the conclusion in the objection document would stand, i.e. that due to
Among other things, the wholesale agreement, Ardian's purchase of Míla would distort competition and there would be a need
to intervene to counteract them. It would also be the supervisory authority's preliminary assessment, on this
at the stage of the investigation, that the conditions offered were not sufficient. It was then on
The meeting discussed other possible conditions that could be imposed to protect
public interest. At Ardian's request, SE put forward specific proposals for further
Conditions.
10.
August 2022Further views were received from the Communications Authority, Nova,
The Fibre Optic, the Connector and the Snare. Reviewers emphasised that Ardian's proposals to
The conditions are not sufficient to remedy the restrictions on competition resulting from the purchase.
on a mile.
11.
August 2022: Conciliation meeting held with Ardian. Discussion of possible
Further conditions continued. Was the conclusion of that meeting that there was reason to
to continue talks.
Ardian
Seeks for the SE to extend the deadline to investigate the matter.
11.
August 2022: Letter from Ardian requesting that the SE utilises
a provision of competition law to extend a deadline in order to hold
Continue the peace talks.
11.
August 2022SE responds to Ardian's request for an extension of the deadline. In
The letter states that, in the regulator's view, the grounds are „to explore
To discuss in further conciliation talks with Ardian whether this matter can be resolved with them.
cease, on the one hand, the community's interests from competition on extremely important
market, and on the other hand, that the commercial interests related to the sale of Míla are
adequately secured. In light of this and having regard to Ardian's request
The Competition Authority hereby extends the deadline for the investigation into the Ardian merger.
and a mile in about 20 working days.“ See more notification South East.
12.
August 2022Meeting with Ardian. Discussion of structure and content.
further settlement meetings. SE directed Ardian to submit a written proposal.
and explanations of possible further conditions that the company had discussed on
the meetings of 9 and 11 August 2022. This could be done on a non-binding basis but
It would be important for the SE to be able to assess as soon as possible whether the ideas were realistic.
speech. Ardian said that this was being worked on and that proposals and explanations would be
Send the SE as soon as possible.
16.
August 2022: Conversation with Ardian. SE enquired about when Ardian
would submit a written specification and explanations of possible further
conditions. SE was informed that there would be a delay in Ardian submitting this.
17.
August 2022Meeting with the CEO of Síminn. The status of the investigation was discussed.
SE and on the imposition of possible further conditions for Ardian's acquisition of Míla.
18.
August 2022: Conciliation meeting with Ardian. Discussed, among other things, a possible increase.
Míla's investment in infrastructure and other possible positive effects that could result from
We are buying Ardian from Míla.
18.
August 2022Meeting with the CEO of Míla. Among other things, the following were discussed:
Míla's investment plans and the company's position today.
18.
August 2022Ardian's lawyers attended the SE meeting with the CEO of Míla. Was
Then discussed the migration of Síminn's systems to Míla at the end of 2021. It was discussed
Concerns of the Communications Authority and of Míla's customers and competitors about the impact
This shift in competition and discussed possible conditions for protection
competition.
18.
August 2022Comments from Ardian and Síminn on the perspective of the Communications Authority
and telecommunications companies from 10 August 2022. In the reviews, it was therefore mainly
objected that the transfer of Télís systems to Míla would have the effect that Télís could
Do not deal with infrastructure companies other than Míla, except through an intermediary.
Mile.
19.
August 2022A meeting with the board of directors of Síminn hf. SE went over the following
a competitive problem that needed to be resolved regarding the sale of Míla and the board
pointed to the positive effects of these transactions. Also discussed were possible further
conditions to prevent the sale of Míla from distorting competition.
22.
– 25 August 2022: Conversations with Ardian where SE made enquiries
about when Ardian would submit a written implementation and explanations of possible
further conditions, as the matter would be on hold pending further proposals from Ardian
would come up.
26.
August 2022Ardian sent the SE written proposals for further conditions
along with explanations of them.
29.
August 2022SE settlement meeting with Ardian. Adrian's proposals from
26 August 2022.
30.
August 2022: SE meeting with Síminn. Síminn was asked about various
Matters relating to Ardian's proposals.
2.
September 2022: SE sent
An Ardian memorandum (30 pages) which included responses to Ardian's proposals on
further conditions. The memorandum, among other things, argued that Ardian's proposals were
not sufficient to resolve the competitive problems that resulted from
the purchase of Míla.
5.
September 2022Settlement meeting
with Ardian. Discussion of Ardian's proposals and the contents of the SE's memorandum of 2 September.
2022.
6.
September 2022: Ardian
Sends SE further proposals for conditions.
7.
September 2022: Settlement meeting
with Ardian. Discussed Ardian's new proposals.
8.
September 2022: Settlement meeting
with Ardian. Further discussion of Ardian's new proposals.
9.
September 2022: To
Ardian sent the SE a draft settlement setting out the SE's proposals for the conditions.
which it is necessary to impose to protect competition. In addition, drafts were found
to a statement that it was deemed necessary for Síminn to sign.
12 September 2022: Ardian
Sends comments and amendments to the SE regarding the SE's draft settlement.
12 September 2022Settlement meeting
with Ardian, where the status of the matter and Ardian's response to the SE's proposals are discussed.
12.
September 2022Meeting with Míla and Ardian where Míla
stated its assessment of the proposals contained in the EC's draft agreement of 9 September
2022.
13.
September 2022Email correspondence regarding various proposals
Ardian on changes to the existing draft settlement and SE sent Ardian updated
draft.
14.
September 2022: The phone identifies SE as the company being
ready to sign the declaration from 9 September 2022.
14.
September 2022Ardian informs the SE that the company wishes to
to settle the matter on the basis of the draft settlement on the table.
15.
September 2022Ardian and SE sign an agreement, and later Míla.
The phone simultaneously signs a declaration.
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