Competition Authority Investigates Debt Write-Offs Skip to content

Competition Authority Investigates Debt Write-Offs

The Competition Authority is investigating cases of debt write-offs for some companies by the state-run banks and other decisions made in regard to the future of these companies. Their competitors worry that they will be given an unnatural advantage.

Photo by Páll Stefánsson.

Director of the Competition Authority Páll Gunnar Pálsson told Fréttabladid that it is important that the banks take competition factors into consideration as they try to solve the companies’ problems, keeping in mind that it is the interest of the public that there is competition on the market.

Minister of Business Affairs Gylfi Magnússon said the general rule is that the banks try to maximize the value of each company that falls into their ownership but that competition factors will also be considered as the Competition Authority requested last fall.

CEO of telecommunication company Síminn, Saevar Freyr Thráinsson, raised awareness of planned write-offs of ISK 30 billion (USD 237 million, EUR 176 million) in the case of Teymi, which operates Vodafone, Síminn’s competitor, in Fréttabladid on Saturday.

Magnússon confirmed that the representatives of various companies have brought similar cases to his attention recently but would not reveal which companies he was referring to.

The minister said it is understandable that people are dissatisfied with their competitors’ debt being written off. He stated that banks must be careful not to provide companies with unnatural assistance and that debts are only written off to such an extent that companies can continue their operations because it is in no one’s interests that companies go bankrupt.

Managing director of the Confederation of Icelandic Employers (SA) Vilhjálmur Egilsson said concerns about write-offs like these had surfaced when the banks collapsed last fall and predicted that the banks will soon be faced with a series of such cases.

It is of most importance to save value, Vilhjálmsson stated, although competition factors must naturally also be taken into consideration.

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