Resolution search: Enter a word and/or choose from the boxes bellow

Decisions

Purchase of IS Haf Investments slhf., owns a minimum of 40% stake in KAPP ehf

  • Get document
  • Case number: 46/2023
  • Date: 19/12/2023
  • Company:
    • Íslandsbanki hf.
    • IS Haf fjárfestingar slhf.
    • Íslandssjóðir hf.
    • Kapp ehf.
  • Sectors:
    • Financial services
  • Policy Area:
    • Mergers
  • Summary

    On 26 September 2023, the Competition Authority was notified of the acquisition by IS Haf slhf. (hereinafter "IS Haf ") of a minimum 40% stake in KAPP ehf. (hereinafter "KAPP"). The notification was accompanied by a simplified merger notification in accordance with paragraphs 5 and 6 of Article 17. a of the Competition Act and the Competition Authority's rules no. 1390/202, and the Authority informed that the merger notification was considered complete.

    The Competition Authority considers this to be a conglomerate merger where the merging parties do not operate in the same market. Effects on competition are therefore not due to concentration or vertical effects. However, it is clear that potential competitive disadvantages may arise due to the relationship between a commercial bank, i.e. Íslandsbanki, and companies in competing businesses.

    Since 2008, the Competition Authority has taken action against anti-competitive practices that may arise from the ownership of commercial enterprises by banks and pension funds, but the ownership of these parties can, under certain circumstances, create a risk of obstacles to competition. This merger, however, is different from when a commercial bank has a direct ownership interest in a company in a competitive market. In this case, a subsidiary of Íslandsbanki, Íslandssjóðir, operates an investment fund that invests in a company.

    Despite this, the Competition Authority considers that Íslandsbanki's ownership of Íslandssjóður involves strong ties that may, under certain circumstances, be the basis for anti-competitive practices. In this regard, it may be mentioned that there may be an incentive for the group in question to maintain business within it and to direct companies to transactions with companies within the group. For these reasons and others, the Competition Authority has considered it necessary to set conditions that stipulate the independence of these companies from each other, i.e. between purchased companies, Íslandsbanki and Íslandssjóður. On 6 November 2023, Íslandssjóður expressed their willingness to enter into a settlement in the case on the basis of Article 17. f of the Competition Act with the aim of preventing harmful relationships of interest or other obstacles to competition that could arise from IS Haf‘s ownership of KAPP and the direct and indirect ownership of IS Haf‘s owners of other commercial enterprises.

    Íslandsbanki and Íslandssjóðir have previously agreed to conditions intended to ensure independence between the companies, cf. decisions of the Competition Authority no. 21/2014, no. 44/2017 and no. 3/2019. The settlements in question are ad hoc in that they concern the relevant investment fund, Íslandssjóðir and the commercial companies in each case.

    With this decision and the settlement set out in the decision, Islandssjodir and the Competition Authority have agreed on conditions intended to prevent negative competitive effects that may arise from the control of the company over enterprise in a competitive market, with a comprehensive settlement that is not case-specific and addresses the aforementioned issues and the same conflicts of interest that the parties' previous settlements have addressed, regardless of which companies or investments are involved in each case.

    In this case, Íslandssjóðir and IS Haf have therefore agreed to conditions that are intended to ensure, among other things, the independence of KAPP and its subsidiaries vis-à-vis Íslandsbanki. The Competition Authority considers that this prevents possible distortions of competition that might otherwise result from the involvement of the Íslandsbanki group in the merger. The Competition Authority also considers that the settlement prevents possible distortions of competition that might result from the general involvement of Íslandssjóðir and Íslandsbanki with companies in a competitive market and even competitors. In subsequent cases, however, certain relationships or concentrations in the markets may be subject to independent review, for example if funds operated by Íslandssjóðir invest in competitors. The parties signed the settlement on 12 December 2023 and its conditions are as set out in the decision, cf. Article 17. f of the Competition Act. They do not require further explanation.