In the business section of Morgunblaðið on 18th October. Margrét Guðmundsdóttir, chairwoman of the board of the merged company N1 and Festi, is quoted as saying that the merger process could have taken much less time and that it would have been more appropriate if the Competition Authority had made clear from the outset what objectives it wished to achieve.
In the business newspaper Viðskiptablaðið on 20th October, Andrés Magnússon criticises the Competition Authority for its slowness in handling the mergers of N1 and Festi, and Haga and Olís.
Due to these comments and in the interest of an informed discussion, it is appropriate to make the following corrections:
1. The Competition Authority advised N1
From the comments of the chairwoman of N1, it can be inferred that she believes the merger investigation has been delayed due to a lack of timely guidance from the Competition Authority.
In this regard, it is worth noting that in November 2017 the Competition Authority set out what its review of the merger focused on. The authority published a specific News on its website, dated 23 November 2017, where views were also sought from all who considered themselves to be concerned.
This was done just a few weeks after the completed notification regarding the merger of N1 and Festi was received, on the 31st. October 2017, but the case had previously been delayed by the merging parties as N1's submission to the regulator was not in accordance with the guidance and rules issued by the regulator.
Following a thorough investigation, on 24 February, the Competition Authority published a detailed preliminary assessment of the merger for N1. It argued that the merger would harm competition and that this must be addressed by imposing conditions or annulling the merger. N1 was invited to submit its views and comments on the preliminary assessment. The company was also invited to propose ideas for conditions. N1, however, expressed its complete disagreement with the regulator's preliminary assessment and did not take the opportunity to submit proposals for conditions within the specified deadline that could remedy the competition concerns arising from the merger.
N1 was thus given the opportunity to respond and, if necessary, to propose conditions that would remove the barriers to competition resulting from the merger. Both domestically and in foreign competition matters, such proposals must come from the merging parties themselves, as they have the best knowledge of the respective companies' operations. Nevertheless, the Competition Authority gave N1 various guidelines on what measures might be considered. It is therefore clear that at the very least after 24 February 2018, N1 was in a position to put forward comprehensive proposals to remedy the competition concerns arising from the merger. However, such proposals were not submitted by N1 until July 2018.
From the foregoing, it follows that the criticism by the chairman of the board of N1 is not in accordance with the facts of the matter.
2. The mergers of N1/Festi and Haga/Olís were investigated as quickly as possible.
It should be noted that the initial investigation into the merger of Haga and Olís concluded on 8 March 2018, and the investigation into the merger of N1 and Festi concluded on 17 April. At that time, the Competition Authority was about to make decisions in each case, concluding that it was unavoidable to annul the mergers in question. In both cases, the merging parties had proposed remedies, but the Competition Authority assessed them as insufficient or, in some cases, submitted so late that they could not be evaluated.
Shortly before the above-mentioned decisions were taken, the merging parties, in each case, chose to withdraw their merger notification. These were unilateral decisions by these companies. By doing so, they brought the respective cases to an end, but the mergers they had announced could then not be carried out. The other option for the merging parties was to accept the Competition Authority's decision to annul the merger or to challenge it before the Competition Appeals Board and, where applicable, the courts.
The companies' aim in withdrawing the merger notifications was to avoid a decision on the annulment being taken, but then to initiate a new case with a view to proposing better conditions that would remove competition barriers and attempt to have the mergers approved on that basis.
Both Hagar and N1 decided to re-notify the mergers a few weeks after the previous cases were concluded. In those cases, proposals for new and improved conditions were put forward. Following an investigation and after detailed discussions, both cases concluded with a settlement whereby the merger in question was approved, subject to conditions to remedy serious competition concerns that would otherwise have arisen.
From the above, it is clear that the Director General of SVÞ's assertions that the Competition Authority is responsible for„slowness“The companies' arguments in handling the cases are not supported by the facts. On the contrary, it was the companies' own decision to extend the investigations. The Competition Authority investigated the cases within the statutory time limits provided for by law.
Further information on the handling of the above-mentioned merger cases can be found here:
3. The Importance of Merger Control – A Closer Look at Merger Rules
While sensible, well-executed mergers can lead to benefits for society, mergers that stifle competition can have serious and irreversible consequences. They manifest, for example, in less innovation, a smaller range of products or higher prices, which harms consumers and the competitiveness of the companies concerned.
The merger rules of competition law are designed to prevent the competitive structure of markets from being altered, through the merger of undertakings, in such a way that competition is eliminated or impaired. Competition authorities are given only one opportunity under the merger rules of competition law to intervene regarding the competition restrictions resulting from a merger.
Merger proceedings begin when the relevant undertakings have decided to merge. The merging parties must then send a notification of the merger to the Competition Authority, providing information on important matters relevant to the assessment of its effects. Once a sufficient notification has been received, the Competition Authority has a statutory phased deadline to investigate the matter and reach a decision. After this statutory period has expired, the Competition Authority loses the power to intervene in the merger.
The above deadlines are set for the benefit of business. Merger investigations are initiated at the initiative of the companies and conclude without intervention from the Competition Authority in most cases. In cases where mergers distort competition, the Competition Authority has a duty to annul them, unless the merging parties propose remedies that eliminate the relevant competition concerns. If this is not ensured, there is a risk that they will lead to irreversible damage for the public and the business sector.
For general information on mergers, see Article no. 2/2018, of 7 September, which provides a more detailed account of the handling of merger cases and the purpose of merger control.
4. The Competition Authority assesses regulations and procedures based on experience.
In addition to the above, it is worth mentioning that the Competition Authority is currently reviewing the rules and procedures for investigating merger cases in light of experience from recent years. In carrying out this review, the Competition Authority is drawing on, among other things, the views and suggestions it has received. Anyone is welcome to submit suggestions.
Discussion of these matters is a useful and necessary part of the enforcement of competition law. However, it is important that such discussion is based on accurate information.
Páll Gunnar Pálsson,
Director-General of the Competition Authority
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