Festi hf.: Settlement with the Icelandic Competition Authority which includes acknowledgement of breach of settlement and payment of fines
Festi hf. and the Icelandic Competition Authority have entered into the attached settlement as a result of an investigation by the Authority in connection with the company’s alleged breach of the commitments in a settlement concluded on 30 July 2018 regarding the merger of N1 hf. and Festi hf. The investigation period dates back to that time.
With the settlement the company acknowledges that certain provisions of the settlement from 30 July 2018 and covers the following in limited periods of time:
- A new party was initially refused an offer for wholesale trade in marine fuel and that the inquiries of the relevant party were later not answered.
- Wholesale price of car fuel to Dælan was not in accordance with the cost assumptions of the settlement at all times and that other actions were taken that were likely to affect its competitive position and the value of assets.
- It was not satisfactorily ensured that the wholesale contact person and his/her work fulfilled the conditions of the settlement at all times.
- A retail store in South Iceland was not sold until after the time limit to carry out the sale had expired by the terms of the settlement.
- Festi did not make sufficient efforts early enough to ensure that negotiations on the revision of the contract with a competitor would be initiated and concluded within the time limit of the settlement and that the registration of communications in the communication log was in accordance with the requirements of the settlement.
- An independent expert was not provided with the necessary information and assistance in monitoring the settlement.
Furthermore, Festi hf. admits that it has violated the provisions of the Competition Act on the duty of disclosure by failing to provide necessary and satisfactory data in a timely manner for the purpose of investigating the merger in question and by not having provided the Competition Authority with a satisfactory account of the company’s views when the settlement was concluded in 2018, which covers limited periods within the investigation period.
As a result of the above, an agreement has been reached to conclude the case by Festi hf. paying an administrative fine in the amount of ISK 750 million, which will be expensed in Q4 and will reduce the company’s EBITDA for the year 2024.
The financial results for October are available and the forecast for November and December has been updated. It is the opinion of the management that the results will be better than expected without the effect of the fine imposed by the Competition Authority. In light of this, the company’s EBITDA forecast for the year 2024 is updated and decreases by ISK 550 million and is now ISK 12,200 – 12,500 million.
With the signing of the settlement, the case is finally closed with respect to Festi hf. and there will be no further investigation or proceedings against the company, employees or other individuals on part of the Competition Authority.
Ásta S. Fjeldsted, CEO:
“In connection with the merger of N1 hf. and Festi hf., a settlement was reached with the Icelandic Competition Authority in July 2018, which included various commitments intended to avert competition restrictions due to the merger. The Competition Authority has been investigating Festi’s possible violations of the settlement from December 2020 when the opening of the investigation was announced.
The signing of the settlement between Festi hf. and the Icelandic Competition Authority today constitutes the final conclusion of the case. Festi hf. thereby admits that it has breached certain conditions of the settlement and timely disclosure of information according to the Competition Act and agrees to pay a fine of ISK 750 million, which is approximately 0.54% of the total turnover for the year 2023. It was the opinion of the company that it was appropriate to conclude this matter with a settlement and look ahead. We will learn from the case and look to the future”, says Ásta S. Fjeldsted
This announcement is published by Festi hf. and contains information that was considered inside information within the meaning of Article 7 of Regulation (EU) No. 596/2014 of the European Parliament and of the Council on Market Abuse (MAR), cf. Act No. 60/2021, on Measures Against Market Abuse, regarding Festi’s settlement with the Competition Authority described above. This announcement is made by Sölvi Davíðsson, Compliance Officer at Festi hf., in accordance with the company’s disclosure obligations according to MAR and Article 2 of the Commission Implementing Regulation (EU) 2016/1055.
Attachment
