A Sticky Decision: Icelandic Competition Authority Debates Whether Guacamole a Sauce

Specialists at the Icelandic Competition Authority have been in debates over the nature of several popular condiments, and whether they should be considered “sauces,” following the planned merger of two major mayonnaise manufacturers in Iceland.

The Icelandic Competition Authority recently intervened in the acquisition of Gunnars by the Skagafjörður Trading Company, which would see the merger of popular brands E. Finnson, Vogabær, and Gunnars. According to authorities, the merger potentially places the new mayo conglomerate in too dominant a position in the market.

Corporate representatives have however disputed this claim, stating that given the difference between their products offered, the new merger would not represent a sauce monopoly.

Now, however, the Icelandic Competition Authority is in the sticky situation of defining what exactly constitutes cold, ready-made sauces, and how they differ from other condiments, spreads, and dips.

In a statement to Vísir, Páll Gunnar Pálsson, director of the Icelandic Competition Authority, said: “Parties to the merger thought we should include guacamole, BBQ sauce, ketchup and stuff like that to replace the cocktail-mixed sauces. Now we find that we have to define these terms rather closely, and we realize that it sounds rather peculiar.

The official report, published on January 26, is some 130 pages long. In its pages can be found subsections detailing at length defining hot sauce, mustard, sour cream, BBQ-sauce and other popular condiments.

Páll Gunnar continued: “It’s fair to say that we have actually had serious meeting about whether ketchup can be substituted for cocktail sauce on a hamburger and whether sour cream can be used in place of mayonnaise. This is important for the companies involved, so it’s important to us. And it matters to consumers.”

 

Nasdaq Central Securities Depository in Iceland Merges with Nasdaq CSD

Nasdaq central securities depository in Iceland has merged with Nasdaq CSD, which will now operate in Iceland, Lithuania, Latvia, and Estonia, RÚV reports. An announcement about the merger states that in its wake, Icelandic operations will be able to make full use of the opportunities and connections that Nasdaq CSD’s securities depository system has to offer, thus creating new opportunities for both domestic and foreign customers.

“This is both the biggest infrastructure change as well as technological advancement that has taken place in the Icelandic securities market for 20 years and will allow us to participate in innovation and development in this branch that will deliver to our clients,” stated Magnús Kristinn Ásgeirsson, CEO of Nasdaq CSD in Iceland. It is expected that the technical part of the merger – the introduction of a new central securities depository system – will be completed on 15 June.

In 2017, Nasdaq CSD became the first European securities depository to obtain operating licenses under the new European Central Securities Depository Regulation (CSDR), and was recently granted a licence to operate in Iceland according to that regulation. Nasdaq CSD has integrated the operations of Nasdaq Securities Centre in Iceland with Nasdaq CSD in accordance with CSDR’s requirements for governance and operations, with a view to ensuring more secure and efficient settlement services in the Icelandic securities market in accordance with international standards.

Icelandair and WOW Merger Dropped

Icelandair Group will not go forward with their purchase of WOW air, RÚV reports. According to Icelandair’s statement to the Iceland Stock Exchange, the decision to back out of the purchase agreement signed November 5 was a mutual one between the two companies.

In a statement released on November 26, Icelandair Group asserted it was unlikely that WOW air would fulfil all conditions required by the purchase agreement before a shareholders’ meeting to be held November 30. The company’s most recent statement says the situation remains unchanged, and on that basis Icelandair Group’s board of directors cannot recommend to their shareholders to move forward with the purchase agreement. The board does intent to propose a postponement on the decision-making at tomorrow’s meeting.

“The management and directors of both companies have worked wholeheartedly on this project. The outcome is certainly a disappointment,” stated Bogi Nils Bogason, CEO of Icelandair Group. He thanked WOW air’s management for their good cooperation and wished the company’s owners and staff all the best.

Skúli Mogensen, CEO and founder of WOW air, stated it was clear from the outset that the merger was an ambitious project. “We thank the management of Icelandair Group for their cooperation in this challenging project and also wish the management and staff of Icelandair Group all the best.”

When asked whether layoffs would be in the cards at the company, Skúli did not rule out the possibility, saying “it could be the case.” Skúli is in talks with another party about the purchase of WOW air, but has refrained on commenting as to who the party is or how far the talks have gone. Svanhvít Friðriksdóttir, public relations officer at WOW, stated the company was in a secure position to continue operations, but would not confirm for how long. Employees have been told they would receive their salaries as usual at the end of the month.

Icelandair shares fell sharply after the announcement the purchase would not go forward, showing a 10% drop around 11.00am this morning.

Icelandair Shareholders Yet to Approve WOW air Purchase

WOW - Icelandair - Keflavík Airport

The Iceland Stock Exchange (ICEX) suspended trading of Icelandair shares yesterday. Túristi.is reported first. According to ICEX, the suspension was made at the request of the Financial Supervisory Authority. Icelandair Group is now in negotiations with shareholders regarding changes to the trading terms of the company’s shares. The purchase agreement is subject to approval at a shareholders’ meeting to be held this week.

The trading suspension is temporary and will last until Friday, November 30, on which date Icelandair Group will hold a shareholders’ meeting. The company reached an agreement to purchase Iceland’s low-cost airline WOW air earlier this month. An announcement from Icelandair Group released on November 26, however, states it is unlikely that the conditions of the purchase agreement will be fulfilled by the November 30 meeting date.

Both Icelandair and WOW had been in the media spotlight for poor performance and financial difficulties over the past several quarters. The meeting agenda is also expected to include discussion of new measure’s to strengthen the company’s finances over the long term.

Icelandair’s subsidiary Loftleiðir Icelandic recently submitted a binding offer for 51% of the shares in Cabo Verde Airlines. On November 5, 2017, the Cape Verdean government signed an agreement with Loftleiðir turning the administration of the airline over to the Icelandic company.

Thirty-Seven Percent of Icelandair and WOW air Destinations Served By Both Airlines

Icelandair airplane Keflavík airport.

Icelandair and WOW air have 21 common destinations, mbl.is reports. Observers of the planned merger of the two companies are now debating how both companies’ route plans might be changed in the coming months.

The two companies fly to a combined 56 cities, 37% of these being serviced by both airlines. Icelandair currently flies to 45 destinations; WOW air flies to 35, although it actually serves 37 airports, as it offers flights to and from two airports in both London and the greater New York City area. WOW air has recently had to cut destinations, discontinuing routes to St. Louis, Cincinnati, and Cleveland. Additionally, it is not currently offering flights to all of its advertised destinations, although passengers can book flights in advance for these on-hold cities. One example is flights to New Delhi, which won’t start being offered until December. Likewise, flights to Tel Aviv were suspended in October and will not resume until June.

Both companies plan to expand their route networks in the future. Wow air wants to expand by 15% and to offer increased flight frequency on its popular routes. Icelandair has planned a new implementation of its flight schedule for 2019, following changes which left it imbalanced this year, such as cutting night flights to Europe and morning flights to North America.

Prime Minister Optimistic About Icelandair and WOW Merger

The merger of Icelandair and WOW air could be a good thing, says Prime Minister Katrín Jákobsdóttir, RÚV reports. In an interview with the outlet, Katrín indicated that she was not concerned about a lack of competition and the consequences this could have for consumers, but rather said the event underscored the importance of the government having active and effective oversight of the aviation sector.

The board of Icelandair Group made a purchase agreement to buy all of low fare airline WOW air’s stocks on Monday. The two companies will continue to operate under their current brand names. Their conjoined market share on the Atlantic aviation market will be about 3.8%. The takeover will create opportunities for an expansion into new markets, and it is expected that Icelandair Group’s unit cost will lower substantially. The company will be even better prepared to compete with other airlines on the international aviation market.

When asked whether or not the government had a hand in the merger, Katrín said no, but indicated that “…we’d had news of these talks. We have, of course, been closely monitoring developments in the aviation market in recent months. We’ve seen that various airlines have gotten into trouble, both here in Iceland and in Europe, not least because of rising oil prices and falling flight ticket prices. So we have of course followed the matter closely, but we didn’t play any part in that conversation.”

Katrín said that the merger appeared to have been well-received on the market and said that while the two Icelandic airlines were becoming one, this shouldn’t raise concerns about a lack of competition, “in that we have 28 companies that offer regular flights to and from Iceland. So there’s hard international competition…[C]ompetition is not just domestic, it is, of course, international. I think that will continue to be the case.”

Airlines are not solely important to the tourism industry, Katrín continued, but “…have become economically important in and of themselves. So of course I think this shows that it’s very important for the government to maintain active oversight of this market.”

Katrín ended her comments by saying that she believes the merger could be a good thing, not least because of the economic importance of the air travel industry. “I think this could be positive.”