The impact of a new bill on the measurement of quota shares (quota allowance) in the Icelandic fishing industry.
Introduction
AREV has carried out a detailed analysis1 on the effects of a new bill on the management of fisheries on the distribution of quota shares in Iceland. The analysis sheds light on the significant changes that would occur in the measurement of quota concentration if the bill is passed. The bill has passed its first reading and is before the Committee on Fisheries.
Key findings
The analysis shows significant changes in the measurement of the distribution of quota shares:
- Market share of the largest players is increasing:
- The market share of the 3 largest companies increases by 3.9 percentage points (from 32.6% to 36.5%)
- The market share of the 5 largest companies increases by 7.9 percentage points (from 45.8% to 53.6%)
- The power share of the 10 largest companies increases by 11.2 percentage points (from 68.4% to 79.6%)
- Companies with the largest increase:
- Útgerðarfélag Reykjavíkur: +5.4 percentage points
- Samherji: +3.6 percentage points
- FISK-Seafood: +1.9 percentage points
- Brim: +0.3 percentage points
- Effect on compression:
- The Herfindahl-Hirschman Index (HHI) increases from 555 to 732
- This is a 32% increase in the measurement of compression.
- Despite the increase, the HHI value is still below 1,000, which is considered the threshold for low concentration according to international standards.
Methodology
The analysis is based on a comparison of two datasets:
- Shareholding pursuant to lawCurrent quota ownership under the current legislation
- Shareholding under the billQuota ownership as it would be if the bill were to be passed
Sharing calculator Arev is used to calculate market share in both systems, based on the allocations made for the 24/25 fishing year. We use the Herfindahl-Hirschman Index (HHI) to measure market concentration, which is an internationally recognised metric used by competition authorities around the world.
Context
The international benchmarks for HHI are:
- HHI below 1,000: Low concentration
- HHI 1.000-1.800: Medium compression
- HHI over 1,800: High concentration
Although both figures (pre- and post-bill) are below the 1,000 threshold, there will be a 32% increase in the measurement of concentration compared to the proposed changes in the new bill. Such a significant increase would generally attract the attention of competition authorities if it were a case of a corporate merger.
Interactive analysis
To better understand the impact of the bill, you can view our interactive visualisation which shows:
- Comparison of the 10 largest companies
- Market concentration
- Increase by bill
- Market development
- The HHI article
Click the link for a more detailed analysis.
Conclusions
Although the share under the bill would still be below what is considered significant concentration, its increase is considerable. This raises questions about the long-term impact on the market and whether further concentration could occur in the coming years.
This analysis by Arev is a contribution to an informed discussion on the management of fisheries in Iceland and the effects of changes in the allocation and ownership of fishing quotas on the sector's competitive environment.
- This analysis does not take into account the effects of changes due to relatedness (one-way) and dominance (as defined by competition law). That analysis will follow. ↩︎