Shipping Collusion Cost Icelandic Society ISK 62 Billion Skip to content

Shipping Collusion Cost Icelandic Society ISK 62 Billion

By Yelena

Eimskip Dettifoss
Photo: The cargo ship Dettifoss. A screenshot from RÚV.

The illegal collusion between Icelandic shipping companies Samskip and Eimskip cost Icelandic society nearly ISK 62 billion [$452 million, €416 million], according to a newly-published analysis. Eimskip has paid an ISK 1.5 billion settlement for the violations, while Samskip has appealed an ISK 4.2 billion fine it has been ordered to pay. The violations have been called “a costly and terrible attack on consumers, which must not be repeated” by Chairman of the Consumers’ Association of Iceland Breki Karlsson.

Costly for Iceland’s economy

“These numbers shed light on how costly competition violations can prove to be for the Icelandic economy,” stated Ólafur Stephensen, CEO of the Icelandic Federation of Trade in a press release. “It is important to have effective competition monitoring, which uncovers such violations, as well as for the consequences of such competition violations to be such that they deter companies from such actions,” Ólafur added.

“By colluding with each other, the shipping companies showed complete disrespected to workers and consumers in Iceland, and now we see what it cost society,” VR Union Chairman Ragnar Þór Ingólfsson stated. The report by Analytica was commissioned by the Icelandic Federation of Trade, the Consumers’ Association of Iceland, and VR Union.

Eight-year investigation

The illegal collusion between the companies occurred between 2008 and 2013, and included violations such as sharing sensitive pricing and business information and limiting transport capacity. The Competition Authority’s investigation into the matter was the most extensive in its history, lasting eight years in total. Of the ISK 62 billion the collusion cost Icelandic society, ISK 26 billion can be directly attributed to increases in the shipping companies’ tariffs beyond general price levels.

Impacted mortgage fees

Besides higher costs for consumers and Icelandic businesses, the collusion also had wider impacts on the Icelandic economy. The consumer price index rose 0.7% above what would have been expected if the companies’ tariffs had remained unchanged in real terms. This, in turn, meant that borrowers of indexed loans paid an extra ISK 17.4 billion [$127 million, €117 million] due to the collusion, a figure the report’s authors call a conservative estimate. The collusion also raised prices for companies in export, transport brokerage, and land transport within Iceland.

An international anomaly

The analysis notes that during the time the collusion took place, fees of shipping companies in neighbouring countries decreased, while those of Samskip and Eimskip were raised significantly. The performance of the two Icelandic shipping companies was also much better than leading foreign shipping companies during the same period.

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