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Competition Appeal Committee confirms serious violations by Lyf & heilsa

6/14/2010

The events leading up to this case is that in the summer of 2007 a new pharmacy was established in the town of Akranes, Apótek Vesturlands (AV), competing with a pharmacy owned by Lyf & heilsa (L&h) that was already operating there. Shortly after, the Icelandic Competition Authority (ICA) received a tip that L&h had taken into measure actions to hinder AV from entering this market. ICA decided to investigate this case and executed a down raid at L&h premises in September 2007.

After the investigation, ICA came to that conclusion that L&h had abuse its dominance possession with organized actions against AV with the intention to hinder competition. L&h started so called premium club which was supposed to prevent important clients to do business with AV and also L&h started so called “fighting discount”. That discount was a significant discount in important medicines and this discount was only offered in Akranes. Those measures was meant to push AV out of the market and send a clear message to others  that it would not pay to compete against L&h. Those measures were considering a serious violation against competition act and 130 million ISK fine (about 780K ) put on L&h.

L&h appealed that decision to Competition Appeal Committee and called for dismissal or that the fine would be lowered substantially. L&h commented on the definition of the market, its possession on the market and remonstrated against that L&h had violated the competition act.

In the Competition Appeal Committee ruling, that is published today, the decision made by ICA that L&h has dominance position in the market is confirmed and that actions of the company had involved a serious violation in competition act. The Committee rules that suitable fine would be 100 million ISK (about 600K €). In favour of a lower fine the committee pointed out that the market was bound to a small local area. It was also pointed out changes in Icelandic economy.

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