Legislation and jurisdictionRelevant legislation and regulators
What is the relevant legislation and who enforces it?
The Icelandic rules on merger control are set out in the Competition Act No. 44/2005 (the Act) and the Rules on the Notification of Mergers No. 684/2008 (the Rules).
Merger control is enforced exclusively by an independent administrative authority, the Competition Authority (CA). Decisions of the CA may be appealed to an independent administrative committee, the Competition Appeals Committee (the Appeals Committee).Scope of legislation
What kinds of mergers are caught?
The definition of a merger under the Act is similar to the EU definition set out in the EU Merger Regulation 139/2004 (EUMR). It follows that a merger within the Act occurs where a change of control on a lasting basis results from:
- the merger of two or more previously independent undertakings or parts of undertakings;
- the takeover by one undertaking of another independent undertaking;
- the acquisition, by one or more persons already controlling at least one undertaking, or by one or more undertakings, whether by purchase of securities or assets, by contract or by any other means, of direct or indirect control of the whole or parts of one or more other undertakings; or
- the creation of a joint venture performing on a lasting basis all the functions of an autonomous economic entity.
What types of joint ventures are caught?
Joint ventures are handled in the same manner under the Act as under the EUMR. Accordingly, the creation of a joint venture performing on a lasting basis all the functions of an autonomous economic entity constitutes a merger within the meaning of the Act.
Is there a definition of ‘control’ and are minority and other interests less than control caught?
Yes, the concept of control is defined in the Act in a similar manner as in the EUMR. Accordingly, control under the Act stems from rights, contracts or any other means that, either separately or in combination and having regard to the consideration of fact or law involved, confer the possibility of exercising decisive influence on an undertaking, in particular by:
- ownership or the right to use all or part of the assets of an undertaking; or
- rights or contracts that confer decisive influence on the composition, voting or decisions of the organs of an undertaking.
Control is acquired by persons who are holders of rights or entitled to rights under the contracts concerned or while not being holders of such rights or entitled to rights under such contracts, have the option to exercise such rights. Customary minority rights do not constitute control and other interests that do not reach the standard of control are not subject to merger review.Thresholds, triggers and approvals
What are the jurisdictional thresholds for notification and are there circumstances in which transactions falling below these thresholds may be investigated?
A merger falls within the merger control regime if: (i) the combined aggregated annual turnover of the relevant undertakings is 2 billion kronur or more in Iceland and (ii) the annual turnover of at least two of the undertakings party to the merger is at least 200 million kronur in Iceland.
The turnover of a parent, subsidiary and other undertakings within the same group as the undertakings party to the merger shall be taken into account as well as the turnover of undertakings over which they have direct or indirect control.
These thresholds are cumulative and must accordingly both be met for a merger to be caught. If the CA believes a merger falling below these thresholds will substantially impede effective competition, it can bring the merger under the regime if the combined aggregated annual turnover of the relevant undertakings is over 1 billion kronur. This is executed by ordering the parties to the merger to notify it to the CA.
Under the Media Act No. 38/2011, all mergers involving at least one media service provider with an annual turnover of at least 100 million kronur in Iceland must be notified to the CA, notwithstanding the combined aggregated annual turnover of the relevant undertakings. The Media Act also provides that if the Media Commission believes that a merger that does not meet the relevant turnover threshold can substantially impede pluralism or diversity in the media, it may request that the CA demands a notification from the merging parties.
Is the filing mandatory or voluntary? If mandatory, do any exceptions exist?
If a merger meets the relevant turnover thresholds, it must be notified to the CA before the merger is executed. As explained above, the CA can bring a merger under the regime if the combined aggregated turnover of the relevant undertakings is over 1 billion kronur. If parties to a merger that does not meet the turnover thresholds inform the CA about the merger, the CA has 15 working days to decide whether it brings the merger under the regime in accordance with the above.
Do foreign-to-foreign mergers have to be notified and is there a local effects or nexus test?
If the relevant thresholds for turnover in Iceland are met, mergers (including foreign-to-foreign mergers) fall within the scope of the merger regime and must be notified. Hence, a local effects test is not applied.
Are there also rules on foreign investment, special sectors or other relevant approvals?
Under Act No. 34/1991 on Foreign Investment in Undertakings, as amended by Act No. 57/2014, certain types of foreign investment in Icelandic undertakings must be notified to the Minister of Tourism, Industry and Innovation, as further described in the Act. This obligation to notify investments is limited to sectors where there are restrictions on foreign investment: the fisheries industry, the energy sector and the airline sector. However, the obligation to notify does not apply in the latter two industries where the investor is an individual or a legal entity resident or established in a member state in the European Economic Area under the EEA Agreement, member state of the European Free Trade Association or in the Faroe Islands.
According to the Electronic Communications Act No. 81/2003, mergers involving an electronic communications undertaking holding rights to use frequencies must be notified to the Post and Telecom Administration.
Furthermore, Icelandic law contains restrictions to ownership of and the right to use real property, as well as ownership of companies that own real property, pursuant to Act No. 19/1966 on the Right of Ownership and Use of Real Property. The Act limits foreign persons’, resident outside the EEA area and the Faroe Islands, ownership of real property and real property companies in Iceland.
Notification and clearance timetableFiling formalities
What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?
The CA shall be notified of a merger before it takes effect but after the conclusion of an agreement on the proposed merger, the public announcement of a takeover bid or the acquisition of a controlling interest in an undertaking. A merger falling within the regime shall not take effect while it is being examined by the CA. Any violation of these instructions and conditions can be subject to fines of up to 10 per cent of the total turnover of the preceding business year of any undertaking or association of undertakings involved in the violation. Fines for not notifying the CA of a merger are applied in practice. The CA is authorised, however, with the consent of the parties involved, to conclude the matter by a settlement.
In addition, the CA may, on request, grant an exemption from the obligation that a merger should not take effect while it is being examined by the CA, provided that it is established that delaying the implementation of the merger could harm the undertakings concerned or its business partners and threaten competition. Such a request shall be in writing and reasoned. An exemption may be made subject to conditions to ensure effective competition.
Which parties are responsible for filing and are filing fees required?
The parties to the merger, or the parties obtaining control, as applicable, shall jointly prepare the notification of the merger. If an undertaking acquires a controlling share in another undertaking, the undertaking initiating the takeover shall prepare the notification of the merger. In the event of a takeover bid for an undertaking, the bidder shall prepare the notification. The filing fee is 250,000 kronur.
What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?
The CA shall, within 25 working days, notify a party that has submitted a notification of a merger if it sees reason for further investigation of the competitive impact of the merger. This time limit begins on the first working day following the receipt by the CA of a notification meeting the conditions set out in the Act and the Rules. If the merger notification is not sufficient in that respect, the relevant time limits do not commence. If no such communication is received from the CA within the established period, the CA cannot annul or otherwise intervene in the merger. A decision on the annulment of a merger shall be made no later than 70 working days from the time that a notification pursuant to the first sentence has been sent to the party or parties notifying the merger. If it is necessary to obtain further information to properly review the merger, the CA may extend this time limit by up to 20 working days.
If the CA fails to make a decision on whether to annul or establish conditions for a merger within the aforementioned time limits, the CA can neither annul the merger nor make it subject to conditions.
The merger may not be implemented before the CA has reached a positive decision to that extent. As described in question 9 the CA may, however, on request, grant an exemption from the obligation that a merger should not take effect while it is being examined, provided that it is established that delaying the implementation of the merger could harm the undertakings concerned or its business partners and threaten competition. Such a request shall be in writing and reasoned. An exemption may be made subject to conditions to ensure effective competition.Pre-clearance closing
What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?
Closing before clearance is considered equivalent to an absence of filing and is accordingly subject to the same sanctions as set out in question 9. The same applies to integration of activities of the merging entities before clearance.
Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?
As stipulated in question 7, foreign-to-foreign mergers that meet the relevant thresholds for turnover in Iceland fall within the scope of the merger regime and must be notified. Sanctions, as described above, are applicable in such cases.
What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?
No specific solutions permitting closing before clearance are provided for under the Act in foreign-to-foreign transactions, other than the CA’s granting of an exemption from the obligation that a merger should not take effect as described in question 11.Public takeovers
Are there any special merger control rules applicable to public takeover bids?
No, there are no special merger control rules applicable to public takeover bids. However, the notification of a merger in connection with a public takeover bid must be notified to the CA after the bid has been made public.Documentation
What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?
A merger notification shall include information on the merger, the undertakings concerned, the relevant markets and other details necessary for assessing the competitive effects of the merger. In brief, the standard notification shall, for example, contain:
- a short description of the merger;
- basic information of the parties to the merger, such as the names of the parties and the nature of their operations;
- detailed information on the background of the merger, its objectives and nature;
- information of ownership and control of all the parties to the merger;
- personal and financial relationship between the parties;
- all documents relating to the merger;
- detailed information on the market definition;
- a description of the effect on consumers and intermediaries; and
- a declaration certifying that the data provided by the parties is complete and accurate.
A short form may be used for the purpose of notifying a merger where one of the following conditions is met:
- the markets affected by the merger are not related;
- two or more of the parties to the merger are engaged in business activities in the same product and geographic market (horizontal merger), provided that their combined market share is less than 20 per cent;
- two or more of the parties to the merger are operating in product markets that are upstream or downstream of a product market in which either party to the merger is operating (vertical merger), provided that their individual or combined market share is less than 30 per cent;
- the merger in question is a joint venture that has a limited effect in Iceland; or
- a party acquires sole control of an undertaking over which it already had joint control.
The following information shall accompany a notification submitted in short form:
- an overview of the undertakings directly or indirectly controlled by the parties to the merger;
- a description of the product, service and geographic markets that are affected by the merger and a reasoned assessment of the market share of the undertakings in question in such markets;
- a reasoned assessment of the competitive impact of the merger;
- copies of all contracts and other instruments upon which the merger is based, together with copies of the annual financial reports of the undertakings that are parties to the merger; and
- a declaration certifying that the data provided by the parties is complete and accurate.
Submission of wrong, misleading or insufficient information to the CA is subject to fines or up to two years imprisonment. Fines can be imposed on both individual and legal persons.Investigation phases and timetable
What are the typical steps and different phases of the investigation?
During the first phase of investigation, described in question 18, the CA will first review the merger notification and see if it is complete or if any information is missing. The CA may request information not only from the parties, but also from other market players, including the parties’ suppliers, customers and competitors. When the CA has all the information required, it will decide whether there are grounds to move on to the second phase of investigation. If the CA is of the opinion that the merger notification is not complete, it will call for additional information to be provided. The 25-working-day preliminary investigation will start when the notification is deemed complete.
The second phase of investigation is for mergers that the CA considers likely to be harmful to competition. During the second phase, the CA will perform a thorough definition of the relevant markets and evaluate the market power of the parties to the merger. To do so, the CA may request further information not only from the parties, but also from other third parties as described above. In cases raising competition concerns, the CA will issue a statement of objection and, if relevant, give the parties a chance to propose remedies. The parties then have the opportunity to respond to the CA’s statement of objection and present their arguments and views on the case, before the CA issues a final decision.
If the CA is of the opinion that a merger will obstruct effective competition by giving one or more undertakings a dominant position or by strengthening such a position, or will result in a significant distortion of competition in the market in other respects, the CA may annul the merger. The CA may also establish conditions for such a merger that must be met within a given time.
What is the statutory timetable for clearance? Can it be speeded up?
The procedure of the CA is explained in question 11. The timetable for clearance is as follows.First phase (maximum 25 working days)
- This phase is common to all mergers. The CA shall, within 25 working days, notify a party that has submitted a notification of a merger if it sees reason for further investigation of the competitive impact of the merger.
- This time limit begins on the first working day following the receipt by the CA of a notification meeting the conditions of a sufficient merger notification.
- A decision on the annulment of a merger shall in general be made no later than 70 working days from the time that a notification has been sent to the party notifying the merger.
- If it is necessary to obtain further information to properly review the merger, the CA may extend this time limit by up to 20 working days.
There is no special mechanism that can be used to speed up proceedings in merger cases in Iceland. However, if the merging parties feel it is necessary to execute the merger prior to the CA having reviewed it substantially, it is possible to seek a special exemption for that purpose. The time in which the CA typically reaches its decision, within the statutory timetable, varies and is dependent upon whether the merger demands further investigation by the CA (see question 17), hence being moved to the second phase. The clearance process cannot exceed the time limits mentioned, and if it does, the CA cannot prevent, annul or impose conditions on a merger.
Substantive assessmentSubstantive test
What is the substantive test for clearance?
The substantive test for clearance is whether the merger impedes effective competition by creating or strengthening an individual or collective dominant position or otherwise significantly impedes effective competition. The substantive analysis is therefore largely similar to the analysis under the EUMR.
The merging parties can raise a failing firm defence. The CA can clear an otherwise problematic merger if one of the merging parties is a failing firm.
Is there a special substantive test for joint ventures?
No, there is no special test for joint ventures. A full-function joint venture will be reviewed by the CA like any other type of merger. However, the possible coordination issues between the parents will be especially examined.Theories of harm
What are the ‘theories of harm’ that the authorities will investigate?
The CA largely applies the same analytical framework as the European Commission. Accordingly, it investigates all possible anticompetitive effects in respect of the type of merger in question, including non-coordinated and coordinated effects, vertical foreclosure, common ownership and conglomerate effects.Non-competition issues
To what extent are non-competition issues relevant in the review process?
The CA is not obligated to consider non-competition issues in its analysis.
In assessing a merger according to the Media Act, the CA shall consider whether the merger may or may not adversely affect pluralism or diversity in the media on the market or markets in which the concerned media providers operate.Economic efficiencies
To what extent does the authority take into account economic efficiencies in the review process?
Under the Act the CA is, in its substantive analysis of a merger, obligated to consider whether a merger will result in technical or economic progress if such progress benefits consumers and does not impede competition. For statements of such progress to be taken into account, the parties must be able to demonstrate in what manner it will benefit consumers and to what extent and when it will materialise.
Remedies and ancillary restraintsRegulatory powers
What powers do the authorities have to prohibit or otherwise interfere with a transaction?
As described in question 17, the CA may annul a merger if it has reached a conclusion that a merger will obstruct effective competition by creating a dominant position or by strengthening such a position, or it will significantly impede competition in the market in other respects. The CA may also establish conditions for such a merger that must be met within a given time.
In the event that the CA has found that a merger does not impede competition or has approved a merger subject to conditions, the CA may revoke such a decision where:
- the decision is based on incorrect information for which one of the merging parties is responsible or where it has been obtained by deceit; or
- the undertakings concerned violate the conditions attached to the merger.
Is it possible to remedy competition issues, for example by giving divestment undertakings or behavioural remedies?
Between filing and the final decision of the CA, the notifying parties may propose amendments to the transaction to remedy competition issues. The parties may propose various remedies (behavioural as well as structural), such as selling of assets to third parties (those third parties are subject to approval by the CA), to execute a contract (eg, a trademark or patent licence), to amend conditions of sale or to keep the CA informed of any change in the structure of the relevant market (such as an increase in the parties’ market share), etc.
As explained above, the CA may establish conditions for a merger that must be met within a given time. These conditions vary in each case, such as obligations for merger parties to sell assets to third parties, to keep the CA informed of any change in the structure of the relevant market and to guarantee that the majority of the board of directors is independent from the controlling merger parties.
What are the basic conditions and timing issues applicable to a divestment or other remedy?
When there are conditions on divestment or other remedies, the CA generally sets conditions that the assets have to be sold in a defined and transparent sales process within a specific time limit. These time limits are, however, eliminated from the published decisions for confidentiality reasons.
What is the track record of the authority in requiring remedies in foreign-to-foreign mergers?
As explained in question 7, foreign-to-foreign mergers that fall within the scope of the merger regime must be notified and will be reviewed.Ancillary restrictions
In what circumstances will the clearance decision cover related arrangements (ancillary restrictions)?
As under the EUMR, it is recognised that certain contractual restrictions may be directly related to and necessary for the successful implementation of a merger. A decision that clears a merger is deemed also to clear such restrictions if they meet the criteria of direct relation and necessity.
Involvement of other parties or authoritiesThird-party involvement and rights
Are customers and competitors involved in the review process and what rights do complainants have?
Without obligation, the CA habitually seeks comments of third parties such as customers and competitors during its review of a merger. Moreover, it seeks comments from other third parties if it considers it to be useful to the review process.
Furthermore, in three relatively recent merger cases the CA considered the markets involved to be highly relevant to the public, which drove the CA to release the merger notifications, in which confidential information had been omitted, on their website and publicly request comments as to the possible effects of these mergers on competition in the relevant markets.
Third parties are not parties to the merger case and do not have the relevant procedural rights. It follows that third parties do not have automatic access to the case file and the CA is not obligated to hear them.
It should be noted, however, that a third party can appeal the decision of the CA in a merger case to the Appeals Committee if it can demonstrate sufficient individual interest in the outcome of the case. A recent example of this is a case where the CA cleared a conglomerate merger with certain conditions, but a third party, a competitor, appealed the decision to the Appeals Committee. In its ruling in case No. 6/2018 the Appeals Committee found that the third party had demonstrated sufficient interest in the outcome of the case. The third party was therefore granted access to the case and the claims of the merging undertakings to dismiss the case were rejected.Publicity and confidentiality
What publicity is given to the process and how do you protect commercial information, including business secrets, from disclosure?
The merger notification is not automatically publicly available, and the CA does not publish information in relation to the filing of notifications. Under the Information Act No. 140/2012, however, government authorities are obliged to grant the public access to materials concerning specific matters, if requested, with certain derogations. These derogations include, inter alia, restrictions on the right to information, owing to private interests such as important financial or commercial interests of businesses or other legal entities.
Decisions of the CA as well as rulings of the Appeals Committee are published on the CA’s website. Parties to a merger case may, however, request that documents or parts of documents containing commercially sensitive information remain confidential. In the published versions of such decisions and rulings, reference to confidential information is accordingly omitted.Cross-border regulatory cooperation
Do the authorities cooperate with antitrust authorities in other jurisdictions?
The CA participates in international cooperation in its field. First, the relevant authorities of Iceland, Norway, Denmark, Sweden, Finland, the Faroe Islands and Greenland are engaged in regular cooperation. Second, the CA participates in cooperation based on the EEA Agreement, including cooperation organised by the European Competition Network. Finally, the CA is party to the International Competition Network and takes part in cooperation in the field of competition within the OECD.
Judicial reviewAvailable avenues
What are the opportunities for appeal or judicial review?
As stipulated in question 1, the decisions of the CA may be appealed to a separate and a superior committee, the Appeals Committee. A written appeal must be received within four weeks from the time the party in question was informed of the CA’s decision. The ruling of the Appeals Committee shall be rendered within six weeks from the date of the appeal. In several instances, the Appeals Committee has not been able to uphold this time frame.
If a party, including the CA, is not willing to accept the ruling of the Appeals Committee it may instigate legal action for annulment before the courts of law. Such action shall be brought within six months after the party obtained knowledge of the Appeal Committee’s ruling. Such action does not suspend the entry into force of the ruling, nor shall it preclude formal enforcement proceedings.Time frame
What is the usual time frame for appeal or judicial review?
As described above, a written appeal to the Appeals Committee must be received within four weeks of the time the party in question was informed of the decision of the CA. If a party is not willing to accept the ruling of the Appeals Committee, it may instigate legal action for annulment before the courts of law within six months after the party obtained knowledge of the Appeals Committee’s ruling.
Enforcement practice and future developmentsEnforcement record
What is the recent enforcement record and what are the current enforcement concerns of the authorities?
The CA received 37 merger notifications in 2018. During this time, decisions were made in 33 merger cases. The CA cleared the majority of these mergers within the first phase. Conditions were imposed on six mergers and one merger was annulled. Three merger notifications were withdrawn in 2018, all of which were later resubmitted.
During the period 2012-2017, the CA received 156 merger notifications. Conditions were imposed on 32 mergers, three mergers were annulled and at least two merger notifications were withdrawn following the issue of statements of objection by the CA, concluding that the mergers should be annulled.
The current enforcement concerns of the authorities remain somewhat connected to the aftermath of the economic crisis in 2008. Most of the merger cases following the economic crisis that started in 2008 involved banks taking over commercial undertakings, to financially reconstruct them and sell them, their commercial business or assets on the open market. Even though most of the cases in question involved conglomerate mergers, the CA established detailed conditions for the banks’ ownership of these companies to ensure that ownership does not lead to harmful disruptions to competition as a result of the unusual circumstances present in the Icelandic economy. However, the most current concern with regard to the aftermath of the financial crisis is now the increased ownership of pension funds and investment funds of commercial undertakings, which has increased substantially, raising concerns within the CA, which believes that this can possibly impede competition, especially if certain pension funds, investment funds or related parties have minority shareholdings in two or more competitors or undertakings on different levels of the same market.
The focus of the CA has also been on the retail market. The Icelandic retail market has been going through considerable changes in recent years with the entry of large-scale global retailers into the Icelandic market. The CA has published several merger decisions involving mergers of large retail companies as well as retail companies and fuel companies. Notable cases include decisions of the CA in cases No. 9/2019 and 8/2019. In its ruling in case No. 9/2019, the CA considered a merger between a large listed retail company that operates supermarkets, convenience stores, warehouses, distributors and clothing stores and a large fuel company would be likely to impede effective competition. Therefore, the CA imposed conditions to the merger, which were accepted by the merging parties and the matter was concluded with a settlement between the CA and the merging parties. A similar result may be found in case No. 8/2019, which involved a merger between a listed fuel company and a large retail company that operates supermarkets, convenience stores, a warehouse and electronics store.Reform proposals
Are there current proposals to change the legislation?
According to a list of legislative bills to be submitted to the parliament in 2018-2019, a bill is to be submitted that will entail updates to the Act and amendments in line with a Nordic cooperation in the field of competition law. Because the bill has not been submitted to the parliament yet, further information on its content is not available at this time. It is unclear when the bill will be submitted to the parliament.
The aforementioned list of legislative bills also includes a bill to a new legislation on state aid measures. The act is intended to lay down procedures to be followed by the competent authorities in the case of state aid measures or possible state aid measures. Furthermore, the bill contains legislative powers that relate to the supervision of state aid by the EFTA Surveillance Authority. Should the bill become law, it will entail changes to the Act in such a way that provisions of the Act on state aid would be removed from the Act.
Update and trendsKey developments of the past year
What were the key cases, decisions, judgments and policy and legislative developments of the past year?Key developments of the past year36 What were the key cases, decisions, judgments and policy and legislative developments of the past year?
As mentioned in question 34, the CA has in recent years raised concerns over the increased ownership of pension funds and investment funds of commercial undertakings, especially investment funds that are managed by management companies that are related to the three large commercial banks in Iceland. The CA has set conditions for such investments that are intended to ensure commercial independence of commercial undertakings from the three large commercial banks. The CA has considered these conditions necessary to maintain effective competition in the financial market. The CA has also considered the conditions to be necessary to ensure that dealings between the commercial undertakings and other companies owned by the three large commercial banks are based commercial grounds, and to prevent tying of different types of services.
In 2018, the CA made several decisions in cases involving mergers of investment funds and commercial undertakings. Notable cases include the decisions of the CA in cases No. 10/2018 and 21/2018. In both cases, the CA imposed conditions to a merger in the form of an investment of an investment fund in a commercial undertaking. The investment funds were managed by management companies that were related to the three large commercial banks in Iceland. The objective of the conditions was to ensure the commercial independence of the commercial undertakings from the large commercial banks. To achieve this objective, the board of directors of the commercial undertakings shall be independent from the relevant commercial bank and related parties. The board of directors of the commercial undertakings shall also be independent of their competitors. Furthermore, the conditions include instructions in relation to disclosure of information from the board of directors of the management companies to their shareholders.