Observation status of Eimskip shares
In light of the decision of Nasdaq Iceland to give Eimskip‘s shares an observation status, with reference to leak of documents to the Icelandic National Brodcasting services (RÚV) relating to the investigation of the Icelandic Competition Authority, the Company would like to state the following, cf. Art. 2.4 in Nasdaq Iceland Rules for Issuers.
Information leak
The leak of investigation documents and the following media coverage has already caused damage to the Company’s shareholders, as harming its image.
The leak of confidential information of listed companies is in violation with the act of securities transactions. Eimskip has formally requested Nasdaq Iceland and the Icelandic Financial Supervisory Authority to investigate trading in the Company’s shares during the period which the Icelandic Competition Authority has conducted its investigation. Furthermore the Company has reported the leak to the police.
As stated before the Company has repeatedly requested a copy of the competition authorities request for dawn raid that was submitted to the Reykjavik District Court on 9 September 2013, together with all attached documents. The requests have among other been made by complaints to the Competition Appeals Committee.
It is likely, based on RÚV’s coverage, that its reporters have been given access to the Icelandic Competition Authority’s notification to the Special Prosecutor’s Office. Naturally Eimskip does not have access to this information as the investigation is still ongoing. However following the media coverage the Company has requested access to the information.
Merits of the case
On 10 September 2013 Eimskip announced that the Icelandic Competition Authority had been granted an authorization to exercise a dawn raid at the offices of Eimskipafélag Íslands hf. and its subsidiaries Eimskip Íslands ehf. and TVG Zimsen ehf. The dawn raid was exercised due to alleged breach of Article 10 and 11 of the Icelandic Competition Act. The same day the Company requested a copy of the dawn raid request along with all attached documents. That request was denied by the Icelandic Competition Authority.
It must be pointed out that Art. 10 of the competition law contains provisions on prohibition of restrictive practices. Companies and individuals may be held responsible for violation of Art. 10, in accordance with articles 37 and 41. a. of the competition law. Therefore participation of individuals is taken into account in connection with investigation of possible violations of Art. 10. On the other hand Art. 11 of the competition law prohibits the abuse of a dominant position. Only companies can be held responsible for violation of Art. 11, in accordance with Art. 37 of the law.
Eimskip announced on 6 January 2014 that the Competition Appeals Committee had rescinded the decision of the Icelandic Competition Authority to deny Eimskip access to the requested documents and ordered the authority to revise its decision.
On 3 June 2014 Eimskip announced that the Icelandic Competition Authority had gathered further information from the Company based on a ruling from Reykjavík District Court. This request was related to ICA’s request from 10 September 2013. At the same time the Icelandic Competition Authority delivered the request for the dawn raid and attached document, in accordance with the ruling of the Competition Appeals Committee. Parts of the documents had been deleted and did therefore not cast any light on the cause for the investigation. The limited information given by the Icelandic Competition Authority on 3 June forced the Company to file a complaint to the Competition Appeals Committee, to receive the deleted documents.
Furthermore the Icelandic Competition Authority felt obligated to inform that it had reported formally certain individuals, to the Special Prosecutor with a letter dated 21 March 2014. At the beginning of the dawn raid the Icelandic Competition Authority denied the Company information on who and how many these individuals were. The Company did therefore not have grounds to evaluate and report the notification to the Special Prosecutor beyond what was already stated in the Company’s announcement dated 10 September 2013. Therefore the information received on 3 June did not add anything to what had been previously announced, i.e. that the Company was subject to an investigation on alleged violation of Art. 10 and 11 of the competition law.
The Company announced on 30 September that the Competition Appeals Committee had partly rescinded the decision of the Icelandic Competition Authority from 3 June and instructed the authority to hand over part of the documents within two weeks. The Company received the said documents on 8 October, which did not cast any further light on the merits of the case.
RÚV’s coverage on 14 October referred to the Icelandic Competition Authority’s investigation of Eimskip’s alleged violation of Art. 10 and 11 of the competition law. In the coverage reference is made to certain investigation documents of the Icelandic Competition Authority. It is declared that the Icelandic Competition Authority had reported the CEO and unnamed employees to the Special Prosecutor for alleged violation of Art. 10 of the competition law.
Eimskip publicly announced on the evening of 14 October that in RÚV’s coverage reference was made to a report from the Icelandic Competition Authority to the Special Prosecutor. The Company stated that it had not received nor seen the report and could therefore neither comment on the content of it nor on the names of those reported. The Company stated that it was clear from RÚV’s coverage that the news network had received much more detailed information on the investigation than the Company itself.
Status of the investigation
On 15 October 2014 the Icelandic Competition Authority published i.a. the following on its website:
“The Icelandic Competition Authority will not accept the press requests on access to documents regarding the case. Furthermore the authority is not prepared to confirm the RÚV’s coverage from yesterday evening. It is specifically stated that the investigation has not reach the stage where it is possible to predict the outcome. The investigation is proceeding well however a lot of work has yet to be done in relation to analysis of documents and leads.”
In the Morgunblaðið newspaper on 17 October there is an article on the investigation by the Icelandic Competition Authority. Among other the Special Prosecutor, Mr. Hauksson is quoted:
“The investigation of this case has not begun. In general I can state that when we receive reports we analyze them in order to conclude if an investigation shall be commenced or not, as an investigation may have negative effect on those concerned. When the analysis has been made it is evaluated if the matter is urgent and needs to be investigated immediately, or if investigation can wait, or if the case should be dismissed. In reality investigation does not commence until a case has been allocated to a team of investigators, that is if an investigation will commence at all. This case has not been assigned to an investigation team."
With reference to the Icelandic Competition Authority’s announcement and what is quoted from the Special Procecutor it is clear that RÚV’s coverage is premature and misleading to the general public. The Icelandic Competition Authority stated that the investigation has not reached the stage where it is possible to predict the outcome. Also, the Special Prosecutor has confirmed that his office has not commenced an investigation.
The Company’s response to the leak
The Company has diligently reviewed all information that it has on hand regarding the investigation, which has not shed any further light on the merits of the case. In the view of the Company no new information has been received, in addition to what has already been disclosed, i.e. that the Company is subject to an investigation on alleged violations of Art. 10 and 11 of the competition law. As previously stated the investigation of possible violation of Art. 10 may include investigation of participation of individuals.
On 16 October Eimskip disclosed that it had taken certain action following RÚV’s coverage.
- Inform the Icelandic Financial Supervisory Authority and Nasdaq Iceland on possible violations of the law.
- Sending a letter to both the Icelandic Competition Authority and the Special Prosecutor requesting all documents and data related to the said coverage of RÚV.
- Report on the leak of confidential information to the police.
The severity of the leak and RÚV’s coverage became clearer with the announcement on 17 October by the Icelandic Competition Authority which has requested criminal investigation on the leak. With its request the Icelandic Competition Authority indicated a potential breach of the confidentiality provisions of the Government Employees Act no. 70/1996, the General Penal Code no 19/1940 as well as provisions of Act no. 108/2007 on Securities Transactions.
The Company will as before publish all information available to it on the Icelandic Competition Authority’s investigation as soon as such information becomes available to it.
Eimskip rejects all allegations of any violation against competition law. The Company expects the investigation on how confidential information was leaked to extraneous will be completed as soon as possible.