Reduction or cancellation of fines

Reduction or cancellation of fines

Skrifstofa_madur_ad_storfumIn order to make it easier for the Competition Authority to uncover collusion between undertakings rules have been established which make it possible for undertakings participating in collusion to abandon the practice. Such undertakings are rewarded for informing the competition authorities of the collusion. By exposing the collusion and working with the Competition Authority on its investigation, the undertakings can avoid fines, or their fines may be reduced substantially. It should be noted that under the Competition Act fines imposed on undertakings for serious violations of the Competition Act can amount to up to 10% of the annual turnovers of the undertakings. Thus, an undertaking with an annual turnover of ISK 10 billion which participates in serious and extensive collusion with its competitors over a period of years may need to pay up to ISK one billion in fines if found guilty. A cancellation or reduction of a debt would therefore probably make a great deal of difference for an undertaking.

Rules similar to those established in Iceland are in effect in the United States, the European Union and elsewhere. The experience abroad is that the rules have led to the exposure of collusion and greatly facilitated investigation. Having regard of this fact, it is considered that the benefit of society from the exposure of collusion between undertakings is of greater importance than the fine amounts which are cancelled when undertakings co-operate with the competition authorities on exposing such activities.

Principal points of the rules

According to the rules, the Competition Authority will cancel fines on an undertaking which otherwise would have been fined:

  • If the undertaking is the first undertaking to provide the competition authorities with evidence which, in the view of the autority, could lead to an investigation of alleged collusion
  • If the undertaking is the first undertaking to provide the competition authorities with evidence which, in the view of the autority, makes it possible for them to prove the collusion

In order to have a fine cancelled, an undertaking must also meet the following conditions:

  • It must show full willingness to co-operate during the investigation of the case and provide the competition authority with all the evidence and information it possesses in connection with the alleged violation while the investigation is in progress
  • It must end its participation in the alleged violation no later than at the time that it exposes the collusion
  • It must not have coerced other undertakings to participate in the collusion

Even if an undertaking does not meet the conditions for having a fine cancelled, it may nevertheless meet the conditions for having the amount of a fine reduced in a case relating to collusion between undertakings.

In order to have a fine reduced an undertaking must provide the Competition Authority with evidence which, in the opinion of the Authority, represents an important addition to the evidence already possessed by the Authority. Furthermore, the undertaking must end its participation in the alleged collusion.

In assessing the extent of the reduction of the amount of the fine incurred by an undertaking consideration is given to the point in time at which the undertaking supplied the evidence and its significance for the investigation of the case.  Furthermore, the Competition Authority will take into consideration the co-operativeness of the undertaking after it supplied the evidence. If an undertaking meets the conditions for a reduced fine, the fine will be reduced as follows:

  • The first undertaking that meets the condition for a reduced fine may have the amount of the fine reduced by 30 to 50%
  • The second undertaking that meets the condition for a reduced fine may have the amount of the fine reduced by 20 to 30%
  • Other subsequent undertakings meeting the conditions for a reduced fine may be granted a reduction of up to 20% of the amount of the fine

Once the Competition Authority has verified that an undertaking meets the conditions for a reduced fine the Authority will notify the undertaking in writing. Also, an undertaking requesting a reduced fine and meeting all required conditions will be informed in writing of the intention to reduce the amount of any potential fine imposed on the undertaking.

An undertaking requesting the cancellation of a fine or the reduction of a fine shall submit a request to such effect to the Competition Authority.

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