Merger concerning the acquisition by Samkaup hf. of the assets of two stores from Basko verslanir ehf.

This decision concerns the acquisition by Samkaup hf. (hereinafter Samkaup)
at Basko stores of Basko verslana ehf. (hereinafter Basko) in Reykjanesbær and Akureyri
which have been run under the Iceland brand. The decision follows
because Samkaup's purchase of the assets of 12 Basko stores was approved in November
2018, see decision no. 29/2018. In that case, which concerned 14 shops, gave
The Competition Authority indicated right from the early stages of the case that it appeared to them that
the merger would not have a harmful effect on competition in the capital region, but the likelihood
that competition would be harmed in local areas, i.e. particularly in
in the South-West and in Akureyri. The investigation of the case strengthened the authority's assessment.
The merger parties then agreed to exclude the stores in Akureyri and Reykjanesbær from the original agreement. On that basis, the Competition Authority was able to take
position on Samkaup's acquisition of 12 Basko stores, cf. the aforementioned decision. In
Subsequently, the merger parties announced that Samkaup's new acquisition of the outstanding
two Basko stores. Those purchases are the subject of this case. That is
the conclusion of the Competition Authority's investigation that, when considering concentration
at the grocery market in the Akureyri and Eyjafjörður area on the one hand, and in the
in the South-West, the market share of Samkaup and other competitors and
Changes to Samkaup's share following the merger would then distort competition in
significantly in the relevant markets.

The investigation into the matter revealed that only three parties,
which have a significant share, are active in the conventional grocery market
in Akureyri and the Eyjafjörður area, i.e. Hagar hf. with its Bonus stores and
Hagkaups, Samkaup with its Nettó and Krambúðarinnar stores, and Basko with its store
Iceland. Following the merger, the number of competitors is reduced from three to two, market share
Samkaupa would be [40-45]% and the combined share of Samkaupa and Haga in Akureyri and
The Eyjafjörður area would be [95-100]%. Market concentration is also high and
would increase significantly. This provides a strong indication of the competitive
problems arising from the merger.

In the South-West, there are four parties, which have a noticeable
share, operating in the traditional grocery market, i.e. Hagar hf. with
Bónus and Hagkaups stores, Samkaup with Nettó stores, Krambúðarinnar and
The co-operatives, Festi hf. with its Krónan store and Basko with its Iceland store. In
Following the merger, the number of competitors is reduced from four to three, Samkaup's market share
would be [45-50]% and the combined share of Samkaup and Haga, the largest players on
in the market, would be [80-85]%. Market concentration is also high and would
increase significantly. This also provides a strong indication of the competitive problems
which arise from the merger.

The merger would lead to the disappearance of a close competitor of Samkaup in Akureyri and Reykjanesbær.
in the market and to
the merger would therefore lead to a significant distortion of competition on
these areas. Then lead
market barriers to entry, making it unlikely that a new and powerful entrant will emerge.
a competitor could enter the market within a short time and reduce harmful
the effects of the merger. Finally, it is also the Competition Authority's conclusion that those conditions
the merger proponents' submissions regarding the merger are insufficient to offset
the competitive distortion resulting from the merger.

The merging parties have based their argument on the view that
The competition authority should approve the merger in this case in order to strengthen
Samkaup as the third largest competitor in the nationwide grocery market. Prices
If the merger is not approved, it will strengthen the position of Haga hf. and Festi hf. From
For these reasons, it is appropriate to emphasise that it is the task of the Competition Authority in
in merger cases to assess the impact of mergers on competition and thereby also the benefits
consumer in the relevant market. This applies equally to large and small geographical areas.
market and competition law do not permit the living standards of consumers in one geographical
markets are restricted so that the relevant companies can strengthen themselves in another market. Strengthening
Samkaup's position must therefore not come at the expense of consumers in Akureyri and Reykjanesbær.
This viewpoint of the merging parties cannot therefore be of significance as matters currently stand in
this matter.

Í
In light of the foregoing, it is inevitable that the merger must be annulled.