The Icelandic Competition Authority (ICA) has imposed daily fines on the Restaurant Employers’ Association (SVEIT) amounting to one million ISK daily. This decision follows SVEIT’s refusal to submit documents requested by the ICA in its investigation into alleged illegal price-fixing in the restaurant sector, relating to a unilateral collective agreement made by SVEIT with the pseudo-union, Virðing.
The ICA formally launched its investigation after receiving a complaint on 14 March from Efling Union, the Federation of General and Special Workers (SGS), and the Icelandic Confederation of Labour (ASÍ). The complaint highlighted concerns that Virðing was not a genuine union but rather a sham organisation set up by employers in the restaurant sector to lower wages and undermine workers’ rights. As such, any collective agreement between SVEIT and Virðing could not be considered legitimate but instead would constitute unlawful collusion between competitors.
On 31 March, the ICA sent a request for information to SVEIT, Virðing, and two of SVEIT’s member companies, requesting documents concerning the establishment of Virðing and the signing of the agreement with SVEIT. The letter also noted that fines for illegal collusion could amount to up to 10% of the total turnover of the companies involved, and that executives could face up to six years in prison.
Virðing and the two SVEIT member companies in question — Skúli Craft Bar and ROK Restaurant — have complied with the ICA’s request and submitted documents. SVEIT, however, has repeatedly refused to comply and is demanding that the investigation be dropped.
As a result, the ICA has decided to impose daily fines on SVEIT until it ceases its unlawful conduct and hands over the requested documents. The ICA points out that if the so-called collective agreement between SVEIT and Virðing does not meet the conditions of competition law, it may constitute unlawful collusion on employee wages.
Serious and harmful violations
“Such violations are in breach of Article 10 of the Competition Act, cf. Article 12 of the same Act, and are generally considered serious and harmful. In investigations of this nature, the role of the competition authority includes assessing whether a genuine collective agreement exists. Article 19 of the Competition Act grants the ICA broad authority to request all necessary documents in support of its investigation,” the decision states.
In light of this, the ICA concludes “that SVEIT has failed to comply with a clear legal obligation to submit documents, thereby violating Article 19 of the Competition Act. SVEIT shall pay daily fines of 1,000,000 ISK until the requested documents have been submitted to the Competition Authority.”