The Icelandic Competition Authority fines Síminn for commitment violations
The decision made by the Competition Authority (ICA) today states the conclusion that Síminn violated the conditions of the commitments that the company has entered into with ICA in recent years. The decision reveals that the significant difference in price and terms in the sale of English football on Síminn Sport (linear pay TV service), depending on whether it is offered within the Síminn Heimilispakkinn bundle or as a stand-alone subscription, constituted a violation of the conditions applicable to the company. The ICA is of the opinion that the violations are serious and, as a result, imposes a fine on Síminn amounting to ISK 500m.
The conditions violated by Síminn are intended to ensure that Síminn cannot, in light of its strong position in important telecommunications markets, take advantage of its broad provision of services to attract and keep business in such a manner that competitors cannot offer competitive prices or services. The conditions are intended to prevent Síminn from being able, thereby, to limit competition to the detriment of public interests.
The conditions that Síminn has violated are as follows:
- The conditions set in Articles 19 and 20 of the commitments from 23 January 2015 which oblige Síminn to segregate different service aspects so that they are sufficiently segregated and independent of each other as regards prices and other terms. This commitment is originally from 2013 and was entered into as a result of seven investigations being carried out at that time, as well as due to the repeated violations committed by Síminn that the ICA had verified in the years before. Further discussion on the matter can be found here.
- The conditions of Article 3 contained in the commitment dated 15 April 2015 prohibiting Síminn to bundle electronic telecommunications services and linear pay TV services or grant terms that are equivalent to such conduct. In essence, this provision is originally from 2005. At the time, Síminn undertook to refrain from engaging in certain actions when the company took over Íslenska sjónvarpsfélagið (Skjárinn). The commitment from 2005 was revised in 2015. The provisions of Article 3, however, remained in effect, cf. in greater detail here. In 2012, the Supreme Court confirmed the conclusion reached by the ICA that Síminn had violated the same instructions in the commitment from 2005, which are confirmed in the decision of the ICA today.
The aforementioned commitments were reached on the basis of the Competition Act, which authorizes the ICA to end an investigation if the company signs a commitment and permanently undertakes to either take action or to not take certain actions for the purpose of protecting or strengthening competition. The Competition Appeals Committee has established that it is “extremely important” that companies comply with such commitments.
Sýn’s complaint
The case was initiated by Sýn’s complaint in spring 2019. In its complaint, Sýn maintained that the presentation, pricing and terms of the telecommunications and television services of Síminn, and in particular English football, constituted serious competitive restrictions.
The ICA sent Síminn its initial assessment of the company’s conduct in the summer of 2019. On reading this initial assessment, Síminn should have known that the company’s unchanged course could, among other things, violate the conditions imposed on it. Síminn began, thereafter, to offer its competitors wholesale agreements for the sale of English football but did not in other respects take any other action that would have made it possible for the ICA to cease its investigations.
The ICA has since sent Síminn statements of objections explaining the initial assessment of the ICA, and stakeholders have responded to those statements, as well as to other documentation in the case.
More on the violations
It is the conclusion of the ICA that Síminn violated the aforementioned Article 3 in the commitment from 15 April 2015 by offering Heimilispakkinn (with a range of telecommunications services) and Síminn Sport / English football (linear pay TV services) with a considerable difference in price and different business terms, depending on whether the service in question and in particular the English football material was sold in a bundle or individually. Thus the price for Síminn Sport/English football was only ISK 1,000 per month when the service was sold a part of Heimilispakkinn and Sjónvarp Símans Premium, but ISK 4,500 when purchased without buying other services at the same time.
It is, moreover, the conclusion of the ICA that Síminn, through its conduct, violated Articles 19 and 20 in the commitment from 23 January 2015, cf. decision No. 6/2015, which provides for, among others, the segregation of service aspects and the possibility for customers to purchase a part of the service in question from others without this affecting the terms of other services purchased from Síminn.
The ICA’s investigation revealed that the majority of Síminn customers, i.e. almost 99% of those who purchase the English football / Síminn Sport on the systems of the company, purchased the television material through a bundled package, i.e. with Heimilispakkinn and/or Sjónvarp Símans Premium instead of purchasing the service on its own.
It is the conclusion of the ICA that Síminn’s pricing of the English football as part of Heimilispakkinn was a hindrance to the company’s competitors and limited their ability to attract customers.
The aforementioned violations are likely to strengthen the position of Síminn and strengthen the company’s position even further in the telecommunications market, where Síminn’s position is already strong.
The ICA is of the opinion that the aforementioned violations are serious and likely to be detrimental to public interests in the long term, in markets that are important to consumers and the economic sector as a whole. It is, therefore, unavoidable to fine Síminn for the violations. It is a matter of some concern that Síminn has again been found to commit a serious offence.
The ICA, moreover, will have to reach a decision on a number of other complaints that have been submitted in recent months due to conduct in the telecommunications market. The Competition Authority will subsequently undertake to examine whether there is reason to make changes to the conditions currently imposed on Síminn and which are intended to ensure competition. Síminn, moreover, has requested discussions on the revision of the conditions.
Further information may be seen in the information document here.