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Competition Appeals Committee divided on the issue of MS's alleged abuse of a dominant market position but confirms that MS is guilty of a serious infringement by providing false information

12/1/2016

  • A majority of the Committee considers that the Agricultural Products Act takes precedence over the Competition Act and therefore invalidates the Authority's substantive conclusion.

  • A minority of the Committee considers that MS had seriously abused its dominant market position and that the fine imposed for such was appropriate.

  • The Committee unanimously considers that MS is guilty of a serious infringement by keeping important information from the Authority. The fine for this infringement is ISK 40 million.

 The Competition Appeals Committee today issued a ruling on a decision taken by the Icelandic Competition Authority on 7 July 2016. The Authority's decision concludes that MS had seriously abused its dominant market position by selling to its competitors basic ingredients for making dairy products at an abnormally high price, while MS and related parties received said ingredients at a much lower price, even below cost price. The effect of this was to afford MS and related parties a significant competitive advantage and seriously impair their competitors' ability to compete with them. The Authority considered that such conduct was ultimately detrimental to both consumers and farmers. It emerged that MS provided the Authority with false information and failed to supply the Authority with other important information.

 The Committee unanimously agrees with the Authority's view that MS is guilty of a serious breach of the competition law by keeping important information from the Authority during its investigation of the case and that MS's conduct complicated said investigation. The Committee therefore validated the administrative fine imposed by the Authority on MS in this case.

 In reaching its ruling, the Committee was, however, divided on the question of whether or not there had been abuse of a dominant market position in this case. A majority of the Committee (two committee members) noted that certain provisions of the Agricultural Products Act, which permits co-operation between dairy plants otherwise prohibited by the Competition Act, actually permitted MS to sell raw milk to related parties at a lower price than to independent plants. On these grounds, the majority invalidates the Authority's decision in this respect.

 On the other hand, a minority of the Committee (the Chair) was in agreement with the Authority's position that MS “had seriously infringed on Article 11 of the Competition Act. “I also consider that the fine imposed in the decision under appeal was correct….”

 The Committee did not agree with MS's criticism of how the Authority had handled and investigated the case.

 The Authority will now examine the Committee's ruling and decide whether or not it should be referred to a court of law.

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