On Wednesday, 5th February, I attended an interesting meeting of the Federation of Employers on the future prospects for the Icelandic economy. The title was; „Let's nurture business and well-being“.At the meeting, the business environment and competition issues were discussed from a variety of different perspectives. The perspective of smaller businesses dominated the meeting, whereas all too often it is the interests of the largest companies that shape the debate on competition issues. This meeting was a welcome change from that.
The discussion was entirely constructive and is promising that the business community's emphasis on the importance of effective competition is becoming ever stronger. Since the collapse, the Competition Authority has argued that effective competition is the most efficient tool to accelerate the recovery of the business sector and increase productivity in the domestic economy. The Employers' Association's initiative under the motto „The hidden power“ It is based on the same principle and is an example of how the business community can provide a positive check on the government.
One of the speakers, Ásdís Halla Bragadóttir, chairwoman of EVU and Sinnum, spoke about how a competitive mindset in healthcare can turn a years-long defensive stance into an offensive one. An offensive move that will benefit society as a whole.
In the opinion of the Competition Authority, this is one of the most pressing challenges facing Icelandic society. Without competitive incentives in healthcare and other public services, we will not succeed in safeguarding the welfare state for the future. Our neighbours in the other Nordic countries have realised this and have been introducing a competitive mindset into public sector operations in various areas. Here in Iceland, the moment this is mentioned, the dreaded word „privatisation“ hijacks the entire debate.
Another speaker, pharmacist Ólafur Adolfsson, spoke about competition legislation from the perspective of smaller companies. His complaints led to the Competition Authority fining Lyf og heilsu 130 million krónur in 2010 for abusing its dominant market position. The Supreme Court ultimately upheld the infringements and the 100 m.kr. fine. The decision (no. 4/2010) and the handling of the case before the appeals board and the courts provide a good illustration of the conflicts that take place over competition issues in Iceland today.
The long wait for decisions from the Competition Authority was a concern for Ólafur. I share that concern. Those of us who work there are constantly looking for ways to prevent delays caused by companies under investigation. We are also looking for ways to speed up our proceedings in other respects. An example of this is that a very large number of the cases we have examined since the crash begin with a preliminary investigation. Such a preliminary investigation allows us to make an initial assessment of the case and prioritise it before a longer procedure begins. In many cases, matters following a preliminary investigation conclude with recommendations or warnings to the companies in question.
We at the Competition Authority also share an interest in proactive guidance with the Minister of Industry and Trade. Ragnheiður Elín Árnadóttir referred to this role of the Competition Authority in her address. In recent years, the Competition Authority has been active in this area in a variety of ways. Our website, Facebook, Twitter, conferences, advisory meetings and the production of short films are examples of this. In recent months, the Competition Authority has offered courses to company managers on the prohibition rules of competition law. Decisions and opinions also provide significant guidance. But it can be improved, and the authority will soon present an action plan on this.
The problem is that actions in this area are a bit like trying to drain the Atlantic Ocean, especially when you consider the budget allocated to the sector. I doubt many people realise just how great the demand is for the removal of barriers to competition in Iceland today. Therefore, we, the 24 people who work at the Competition Authority, will never be able to meet your highest expectations, even though we will accomplish a great deal. The task is simply too large in comparison to the funding.
The discussion at the Forum of Employers' Associations gives hope that business organisations, the Competition Authority and other government bodies can join forces with the aim of strengthening competition in Iceland. Everyone can play their part. Business organisations can create discipline within their own ranks by not tolerating breaches of competition law, and the government can foster a competitive mindset among itself.
And the Competition Authority is to be swift, instructive and well-connected. Its most important duty is to create a deterrent effect by eradicating corporate violations and public sector obstacles through fines and other interventions. A breach of competition law is, among other things, a company's method of transferring the damage from the crash onto its customers, and therefore consumers. We must never fall into the trap of showing such exploitation any understanding or leniency. The crash taught us all that regulatory bodies must have sharp teeth and use them. Otherwise, no one listens and everything goes back to the same old ways.
Páll Gunnar Pálsson
Director-General of the Competition Authority
[This column was published as an article in Morgunblaðið on 7 February 2014.]
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