Competition authority weighs court challenge or new decision

Iceland’s Competition Authority is considering whether to challenge in court a ruling that overturned its decision on Landsvirkjun’s sale of electricity to cover Landsnet’s transmission losses, or to issue a new decision, mbl.is reports.

The authority said it would review the appeal panel’s reasoning before deciding. It will also seek views from the market and from other authorities in the European Economic Area.

The Appeal Committee for Competition Matters referred the case back to the authority for further consideration. It agreed that evidence gathered during the investigation showed Landsvirkjun had substantial strength in wholesale electricity sales to other retailers and had stood well above other wholesalers during the period examined. The committee also noted that a negative margin between wholesale prices and prices in a downstream market generally increases the likelihood of anti-competitive effects.

However, the committee said the relevant markets needed to be defined more precisely after further investigation. The authority had treated Landsvirkjun as operating in a market for electricity generation and wholesale, a definition it said had been recognised in European competition law and used in previous cases. The authority had also concluded that Landsnet’s purchases of electricity to cover transmission losses took place in a separate market.

The committee found that it had not been sufficiently investigated whether those purchases were distinct from other electricity sales. It also noted that Landsvirkjun had argued during the authority’s investigation that the purchases belonged to a separate market for system services, but later mainly argued before the committee that they were part of the market for electricity generation and wholesale.

The committee said further investigation should establish which transactions fall within the generation and wholesale market, including the role of long-term contracts with large users, and gather more detailed information on the volume of wholesale transactions by other companies. It also called for an assessment of whether Landsnet’s purchases were sufficiently different from other electricity purchases to constitute a separate market, taking substitution and market conditions into account.