On 16 April 2019, the undersigned took part in a panel discussion on a culture of oversight in Iceland. The meeting presented the results of a survey that had been sent to companies on the list of the Confederation of Icelandic Enterprise. The meeting and the survey were advertised on the website. Chamber of Commerce of Iceland.
In this article, I would like to express some reflections on a culture of surveillance in Iceland, as the topic is one of the Competition Authority's key concerns.
1. The survey – how can the results be used?
First, it is to be welcomed that a survey is being conducted among companies which can be used in the assessment of supervision and a culture of supervision. It goes without saying that the Competition Authority will examine the survey in detail to identify the lessons that can be drawn from it and how it can be used to improve the authority's work.
At first glance, it may appear that the Competition Authority fares rather poorly in the survey, compared to other institutions. It is disappointing, however, and detracts from the survey's significance, that only 21 companies answered questions about the Competition Authority. Questions were directed to over 700 companies on the Business Association's list, but of the 380 that responded to the survey, only 21 companies had been in contact with the Competition Authority in the last twelve months and were therefore asked about those interactions.
This is a low figure when considering that the Competition Authority was in contact with around 450 companies in 2018. This raises questions about how well the responses reflect the views of the 30,000 companies operating in Iceland, but as previously stated, the sample was based on the business register of the Confederation of Icelandic Enterprise.
One of the things that needs to be checked is whether the survey meets international standards for the quality of surveys of this type. In this regard, there is no need to reinvent the wheel, as the OECD has published guidance, Measuring Regulatory Performance (2012), on how to conduct surveys of this type so that they can be useful. This is one of the things the Competition Authority will consider when it takes a position on how the survey's results can be utilised.
2. Are the results of the survey negative for the Competition Authority?
When interpreting the results of surveys of this kind, it must be borne in mind that the Competition Authority is somewhat different from most other regulatory bodies. Thus, the main role of the Competition Authority, as stipulated by law, is to take action and stop infringements. The main role of most other regulatory bodies, however, is not to stamp out breaches but to conduct regular, formal supervision of the activities of companies in specific markets, often also possessing regulatory authority and, consequently, a role in shaping the future framework for that market. This distinction is reflected, for example, in the fact that the Competition Authority generally has broader supervisory and intervention powers than other bodies.
It follows from the Competition Authority's role that companies under investigation often have a somewhat negative attitude towards it, simply because it is investigating infringements and other barriers to competition for which the company may be liable. Furthermore, the authority often has to obtain evidence from third parties during investigations, which can be burdensome for the parties concerned. It is also a factor that significant financial interests are at stake in the authority's decisions.
In line with this, the survey suggests that the largest and most established companies are generally the most negative towards regulation in general, but large and potentially market-dominant companies are often investigated by the Competition Authority following complaints from smaller companies.
However, the supervisory authority will review all of this at a more opportune time in order to be able to use the survey constructively and, if necessary, to make comments on it.
3. When assessing supervision and a culture of supervision, consideration must be given to ….
An assessment of the supervision and culture of oversight of commercial activities is not only beneficial to all oversight, but is in fact essential. In making this assessment, it is important to familiarise oneself with the attitudes of companies, but one must also consider various other factors which need to be evaluated holistically. I mention the following in this regard:
Firstly, it is important in the case of the Competition Authority to constantly assess whether its supervision and decisions comply with the rules and criteria of the EEA Agreement. In parallel with Icelandic law, the Competition Authority is applying the competition rules of the EEA Agreement under the vigilant supervision of ESA. In this regard, the Competition Authority notifies the EFTA Surveillance Authority (ESA) of infringement investigations at an early stage and again when a draft decision is available. ESA can likewise intervene and take over the case. This supervisory system also means that Icelandic companies have access to extensive guidance from ESA, which is legally binding in Iceland.
Furthermore, it is important to monitor how the supervisory authority's decisions fare before the appeal board and the courts. Again, at that stage, Iceland is part of a larger European system, where an advisory opinion of the EFTA Court is sought in proceedings before domestic courts, and the ESA also submits written observations to the Icelandic courts.
One might ask what this has to do with a culture of surveillance. The answer is simple: it has everything to do with the Competition Authority's culture of surveillance, because it draws its surveillance methods from European precedents and extensive international cooperation.
Thirdly, the benefits of the supervision must be assessed. The benefits of competition supervision have been extensively researched worldwide, and we can and do build upon established benchmarks in this area.
Fourthly, it is very important to assess how the regulator prioritises its activities and places its emphasis. This is a regular feature of the Competition Authority's internal operations.
And finally, the experience of both the supervisory body (the companies) and the public (the consumer/wage earner) can be a factor in this overall assessment.
The Competition Authority considers all these matters when assessing its own work and seeking ways to improve, and has at some point applied all of these methods.
4. Consumers/wage-earners forgotten – Competition improves living standards
For some reason, the main point in this discussion is often forgotten, which is the end user of the supervision, i.e. the person the supervision is supposed to protect. If public regulation of commercial activities is examined, and particularly the regulatory bodies themselves, they have one thing in common: to protect the interests of consumers, employees, clients, or whatever name we wish to call the general public.
However, the consumer/employee or their representatives are seldom invited to take part in the discussion. This is evident, for instance, from the fact that the public was not consulted in the survey under consideration and that representatives of consumers/wage-earners were not invited to participate in the discussion at its launch.
This is particularly urgent now that important collective agreements, intended to bring about wage improvements for workers, appear to have been reached. A key prerequisite for these improvements to be realised is to ensure that there is effective competition between companies.
5. Positive measures related to a culture of oversight
In discussions about these matters, it is useful to highlight several projects and initiatives related to a culture of oversight:
Firstly, it is very welcome that the government and the Minister for Competition have reached an agreement with the OECD to assess the regulation of the tourism and construction industries, but this project was presented A short while ago. The Competition Authority has long advocated for this and is taking part in the project. It is the wish of all involved that it will have a positive impact far beyond the markets it covers.
Secondly, the Competition Authority has recently been working to strengthen communication and cooperation with other institutions that operate in the business sector. To begin with, the Authority has developed a framework for communication and cooperation with six institutions for this purpose. This project will be presented in more detail in the near future.
Thirdly, the Authority intends to hold a discussion with business, trade union leadership and consumers about important upcoming tasks in connection with the newly concluded living conditions agreement. Effective competition in the business sector is crucial to ensure that the improvements in living standards from the new collective agreement are passed on to wage earners.
Fourthly, this year the Competition Authority will hold events to promote the importance of competition and the main provisions of competition law, aimed at the public, businesses and government, including through the release of videos.
This is in addition to other guidance work carried out by the supervisory authority, such as a series of meetings called 'Conversations on Competition', courses for company managers, etc. However, it must be said that in recent months, the authority has had little capacity for this type of work, due to the pressure of resolving merger cases. Thus, the authority has had to dedicate around 40-50% of its disposal time to merger cases over the last two years, compared to around 15% in the preceding years. Hopefully, this will improve.
6. The business community plays an important role in shaping a culture of oversight.
Finally, it is worth remembering that a culture of oversight is not solely the responsibility of the public sector and regulatory bodies. The companies under scrutiny also have a role to play, and not least their associations. It is therefore an important role for business associations to advocate for good compliance with laws and regulations, to guide their member companies and to take action when the law is broken. It should not be forgotten that, in addition to consumers, the victims of a company's anti-competitive practices can be other businesses.
In this regard, one of the member associations of the Confederation of Icelandic Businesses, the Icelandic Tourism Association, has recently taken the notable step of tackling wrongdoing within its ranks by expelling a company from the association.
Given the seriousness of competition law infringements, it can be expected that similar methods will be applied in future in such matters at the level of the Business Association. Thus, business organisations can play an important role in promoting respect for laws and regulations, and thereby a better culture of compliance and living standards in this country.
Páll Gunnar Pálsson,
Director-General of the Competition Authority
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