State of Competition in Iceland "Grave" Says Regulator Skip to content

State of Competition in Iceland “Grave” Says Regulator

By Steindor Gretar Jonsson

Alþingi parliament of Iceland
Photo: Golli. Alþingi, the Parliament of Iceland.

The Icelandic Competition Authority is not equipped to perform core duties due to budget cuts, according to its leadership. Funding has decreased by 20 percent in the last decade, while economic activity in the country has increased by around 40 percent.

As Alþingi, the Icelandic parliament, debates a 2024 budget proposal, the Authority has submitted a comment on the state of its funding, calling the competition situation “grave”, Heimildin reports. The comment is signed by chairman Sveinn Agnarsson and director Páll Gunnar Pálsson. They warn that due to insufficient funding, the Authority can’t carry out its responsibilities according to law. As a result, they’ve had to prioritise and let important categories fall by the wayside. Despite a significant growth in the economy, the Authority now employs fewer people than it did in 2014, while its budget has not kept up with rising costs and wages. “At the same time, important new tasks have been added, while demands have increased, for example regarding the investigation of mergers,” they write. “These developments have gone beyond our tolerance limit.”

Lack of competition damaging to small economies

The Competition Authority goes on to argue that cutbacks to its budget are inconsistent with the reality that competition in many important Icelandic markets is lacking. The Authority has concluded many investigations that support this, many of whom have been confirmed by court rulings. Such hindrances to competition can be especially damaging in small economies like Iceland’s. Promoting competition would be the right response to the current economic situation, the Authority argues, with inflation at 8 percent. “In many of our neighbouring countries, governments have made efforts to strengthen antitrust authorities,” is stated in the comment.

In the wake of the 2008 financial crash, the interconnectedness of the Icelandic business sector became all too apparent. The Iceland’s Competition Authority subsequently warned of threats to future competition as corporate debt was being restructured and the economy slowly recovered. In the years since, the Authority has intervened in a number of cases, including in the fishing industry and the air travel sector.

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