Advania withdraws its notification of a merger with Wise, following preliminary findings of harm to competition


The Icelandic Competition Authority (ICA) has had a merger between the undertakings Advania hf. (“Advania”) and Wise holding ehf. (“Wise”) under investigation. Advania specialises in a broad range of IT services and is one of the largest companies that provides Enterprise Resource Planning (ERP) software in Iceland. Wise is an IT service company that specialises in developing, selling and servicing the ERP software Microsoft Dynamics NAV.

Preliminary findings indicated that the combined market share of the merged company in the market for development, sale and service of ERP software in Iceland would exceed 50% post-merger. In addition, the investigation implied that the parties were close competitors. Therefore, ICA issued a Statement of Objections (SO) on the 4th of June that according to its preliminary findings, there was a need to intervene in the merger. Today, on the 18th of June, the parties have formally withdrawn their merger notification. With that, ICA’s investigation into the merger has concluded.

ICA received a notification of the acquisition by Advania of all assets of Wise on the 13th of February 2019. As part of the investigation, ICA gathered information, comments and views from both the parties and their competitors, and surveyed undertakings active on the relevant market as well as the parties’ customers. The results of this investigation indicated that the main overlap in the parties’ operations was in development, sale and service of ERP software. In addition, the results indicated that the relevant geographical market is Iceland, e.g. due to the nature of the relevant service and customers preferences. Internal documents that ICA gathered from the parties supported this preliminary finding as well.

ICA gathered information on market shares of undertakings that sell ERP software in Iceland. According to the information, the merged entity would have had a significant advantage over competitors, and exceed 50% market share, depending on the exact definition of the relevant market. In addition, concentration on the relevant markets would have increased significantly due to the merger. Additionally, ICA’s preliminary findings indicated that the merging parties were close competitors. The parties supply comparable services, e.g. both sell the ERP software Microsoft Dynamics NAV, and diversion ratios between them are high. Internal documents that ICA gathered from the parties also supported this preliminary finding. Finally, it was ICA’s preliminary finding that Wise has been an important competitor in the ERP market in Iceland and with the merger, that competitive pressure would have disappeared.

As mentioned before, ICA notified the parties of the preliminary findings with an SO on the 4th of June 2019. In May, the merging parties asked for negotiations on potential remedies to address the Authority’s competition concerns. The parties proposed behavioural remedies, but ICA’s preliminary assessment indicated that such remedies would have been sufficient in addressing and preventing the harmful effects of the merger.

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