Shipping Collusion Cost Icelandic Society ISK 62 Billion

Eimskip Dettifoss

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.

Divers Assess Damage to Cargo Ship

Divers are on their way to a German cargo ship currently that was damaged yesterday, Vísir reports. Environmental concerns surround the ship due to the possibility of an oil leak. Although damage to the ship has been confirmed, the extent of it is not yet known.

En route to Rotterdam

The cargo ship in question ran aground yesterday, September 10, near Akurey, a small island outside of Reykjavík harbour. A possible oil spill was detected in the area and the Coast Guard’s search and rescue team was called in for assistance. The ship, which was on its way to Rotterdam, returned to harbour.

An environmental protection barrier was placed around the ship.

Ágeir Erlendsson, information officer for the Coast Guard, stated to Vísir: “We saw this thin film of oil, both from Óðinn’s (a Coast Guard ship) observation deck and from a helicopter fly-over. This thin film was seen where the ship ran aground. That’s why it’s heading into the harbour, and we will then further quarantine it.”

Divers assessing damage

However, as of today, September 11, the oil leak is yet to be confirmed. Divers are currently on their way to the ship to further assess the situation.

The ship is on lease to Eimskip from its owner, German logistics company Peter Döhle.

“The divers are on their way to assess the damage,” stated  There is some damage, and it is uncertain whether the ship can sail. Most likely, some repairs will need to be carried out, but we do not know the extent of them,” stated Edda Rut Björnsdóttir, a representative for Eimskip. “There is some damage, and it is uncertain whether the ship can sail. Most likely, some repairs will need to be carried out, but we do not know the extent of them.”

The Environment Agency has been informed, and a transportation investigation committee is said to be conducting an investigation into the matter.

Six Icelandic Firms on Yale’s List of Companies Doing Business in Russia, Three Shouldn’t Be

The Yale School of Management names six Icelandic businesses on its list of companies still doing business in Russia, but RÚV reports that three of them have no presence or operations in Russia at all, and one never did in the first place. Attempts have been made to contact the manager of the Yale list, a professor and dean at the university, to make appropriate corrections, but these attempts have not been successful.

Failing grades

The list, simply dubbed “Yale CELI List of Companies” (CELI stands for Chief Executive Leadership Institute”) was started on February 28, days after Russia’s invasion of Ukraine. Since then, the responses of over 1,200 companies regarding their presence and business activities in Russia have been tracked by Professor Jeffrey Sonnenfeld and the Yale Research Team. “Originally a simple ‘withdraw’ vs. ‘remain’ list,” reads the preface, “our list of companies now consists of five categories—graded on a school-style letter grade scale of A-F for the completeness of withdrawal.”

The CELI list is said to be “updated continuously.” As of July 8, 2022, its headline read “Over 1,000 Companies Have Curtailed Operations in Russia—But Some Remain.” As of that time, six Icelandic companies were included on the list. Three of these—Hampiðjan, Knarr Maritime, and Sæplast—were given a grade of F, “Digging In: Defying Demands for Exit or Reduction of Activities.” Two other Icelandic companies—Marel and Naust Marine—were graded D, “Buying Time: Holding Off New Investments/Development” and one, Eimskip, was graded C, “Scaling Back: Reducing Current Operations.”

No operations in Russia, but still on the list

RÚV contacted the public relations officer for the shipping company Eimskip, who said the company had ceased sailing to Russia right after the invasion and moreover, had not had any operations in the country since 2019, when it closed its Russian office. The PR officer said that Eimskip has attempted to contact Prof. Sonnenfeld to correct its record without success.

According to the Yale list, Knarr Maritime, has “members still operating in Russia.” RÚV reports, however, that the company closed its office in Russia two years ago and no longer has any operations there.

Sæplast, a company that designs and manufactures insulated tubs and pallets for use in the fishing industry, issued a statement on its website on Thursday, saying that it has no operations in Russia, and never has. “The company has no office in Russia and no employee works there,” reads the statement. “Sæplast sold tubs to Russia for many years, either directly or through agents and/or independent distributors, but since Russia invaded Ukraine, no products have been sold there or delivered from Sæplast to the Russian market. Allegations about Sæplast’s operations and trade with Russia are therefore incorrect.”

According to Sæplast general manager Daði Valdimarsson, the company has attempted to convey this information to the managers of the Yale list but has had no success. Sæplast has also been in touch with the Embassy of Ukraine to Iceland (located in Finland) via the Iceland Chamber of Commerce.

Still have offices in Russia

Naust Marine is one of two Icelandic companies given a D grade, meaning that they’ve paused but not ceased operations in Russia. Four years ago, Naust Marine signed a major deal to sell electric winches to Russia for use on its trawlers. General Manager Bjarni Þór Gunnlaugsson told RÚV the deal is at a complete standstill, but it’s unclear what that means for future operations.

Fellow D recipient Marel, a food processing company, published a statement on its website on March 9, saying that it “strongly condemns the military actions of the Russian government in Ukraine” and that it had “taken the decision to pause all new projects in Russia.” The statement continued by saying that Marel has a sales and service operation in Russia, and employees 70 people. It will “continue to prioritize the safety and wellbeing of our employees” and “maintain our dedicated teams in the Ukraine and Russia and our office in Russia, despite expected lower utilization in the near future.” The statement also added that “Marel’s annual revenues and order book in Russia and Ukraine amount to approximately 4% of total.”

RÚV was unable to speak to management at fishing manufacturer Hampiðjan, as they were apparently all attending a meeting on Friday. The company has an office in Murmansk, Russia. At time of writing, there was no information on Hampiðjan’s website indicating whether the Murmansk office is still operational, or if the its business activities in Russia have changed at all since the invasion of Ukraine.

Eimskip Responds to Ship Disposal Scandal

Eimskip goðafoss laxafoss

Shipping company Eimskip has issued a statement in response to an investigation that revealed their former ships were sent to a scrapyard in India where environmental and human rights violations are rampant. In the document, the company states its belief that it “complied with laws and regulations” regarding the sale of the ships, and pointed to their buyer as responsible for the decision to recycle them outside of Europe.

Investigation Alleges Eimskip Circumvented European Law

Icelandic news program Kveikur recently investigated how Eimskip had divested itself of two old container vessels. The investigation revealed that the company had sold the ships to a notorious middleman known for sending such vessels to shipbreaking yards in Southeast Asia. At least 137 people have died breaking down old ships in the coastal town of Alang, where Eimskip’s two vessels ended up. Kveikur’s investigative journalists allege that Eimskip’s sale of the ships was carried out in full knowledge of where they would end up and constitutes a circumventing of European law.

Read More: Circumvented European Law to Dispose of Ships in India

Eimskip Says Buyer is Responsible

In the statement, Eimskip denies it sold the ships with the knowledge they would end up as scrap in India, and the “sale of the vessels was not an action by the Company to profit from higher recycling prices in other parts of the world.”

“Although the company believes that it complied with laws and regulations in the sale process, it is clear that the Company could have made greater requirements towards the buyer in light of the age of the vessels,” Eimskip’s statement reads. “That could be done by including a provision in the sales contract that if the vessels should be recycled, it would be done in a recycling yard that complies with European standards. Eimskip apologizes for not doing so.”

The statement adds that Eimskip’s board and executive management hope to “learn from the incident,” and that the company will review its processes to “develop a clearer policy” in the divestment of its vessels.

The full statement is available in English.

Circumvented European Law to Dispose of Ships in India

Eimskip goðafoss laxafoss

Icelandic shipping company Eimskip, one of the largest businesses in the country, used a notorious middleman to dispose of two huge container vessels in India. In doing so, it circumvented European regulation meant to ensure that ships are recycled with the least possible damage to the environment. At least 137 people have died breaking down old ships on the coast where Eimskip sent its old container vessels due to dangerous working conditions. Icelandic news program Kveikur investigated the case.

Once their life on the sea is over, ships are immediately classified as hazardous waste due to the materials they contain, such as asbestos, radioactive materials, heavy metals, and hydraulic oil. European ship recycling facilities have measures in place to ensure such materials are recycled or disposed of safely, with as little damage as possible to the environment and to workers. Such is far from the case in shipbreaking yards in Southeast Asia, where dangerous working conditions and environmental damage are par for the course. This is where Eimskip sent two huge container vessels, Goðafoss and Laxafoss.

The full program is available on Kveikur’s website with English subtitles.

Former Samherji CEO Reinstated

Þorsteinn Már Samherji

Þorsteinn Már Baldvinsson has returned to his position as CEO of seafood company Samherji after stepping down last November. Þorsteinn stepped down from the position last November after an investigation alleged the large fishing company had bribed Namibian government officials to gain access to lucrative fishing grounds, while also taking advantage of international loopholes to avoid taxes.

Read More: Samherji Scandal

A notice on the Samherji website announcing Þorsteinn’s return states that his main task will be leading the company through the challenges presented by COVID-19. “Þorsteinn Már has previously steered Samherji through the Icelandic banking collapse and the global financial crisis with outstanding results. The board of Samherji therefore believes that no one is better equipped to tackle the current situation,” Eiríkur S. Jóhannsson, chairman of the board, is quoted as saying.

Returns despite ongoing investigation

In the wake of the bribery allegations, Samherji solicited the aid of Norway-based law firm Wikborg Rein to conduct an internal investigation. The hiring of Wikborg Rein was heavily criticised, as the firm also defended Samherji’s interests in Namibia. The firm’s investigation is ongoing, and Samherji states that it is expected to be completed later this year.

Samherji increases stake in Eimskip

On March 10, Samherji increased its stake in Icelandic freight company Eimskip by 3.05%, giving it a 30.11% stake in the company after the purchase. As a result, the company’s holding exceeded the acquisition limit. However, Samherji Holding requested an exemption from the takeover obligation, which the Central Bank’s Financial Supervisory Authority approved on March 31. The Authority considers that the minority protection of other shareholders has not been violated.

“These are very particular and unusual conditions on the financial market,” stated Björgólfur Jóhannsson, director of Samherji Holding. “We do not therefore consider it wise to put forth a takeover bid in the shadow of this turmoil but we hope the conditions will be more favourable later.”