Ráðstefna Rekstrardeildar Háskólans á Akureyri, 17.05.2002


Valgerður Sverrisdóttir
Minister of Industry and Commerce

Address at a Conference on Mergers and Acquisitions,
University of Akureyri, May 17th 2002.

Dear conference guests.
It is a great pleasure to address you here today at this conference. It is indeed always enjoyable to come to the University of Akureyri to witness the miracle that have taken place here over the past fifteen years since the university was founded. The creation of this university has proved to be, in my view, the single most successful operation in regional policy in Iceland. The creation and the on-going success of the organization has lifted the spirit, not just of Akureyri and the vicinity, but for all the rural areas in Iceland. Young people of the rural areas of Iceland do not have to go to the capital area in order to get higher education. They can get quality education in ther own area. This is important and it shows that graduated students form the University of Akureyri tend to use their education here in this area and other areas which need educated people in order to create a thriving economy.

The topic of the conference here today is merger and acquisitions. As the Icelanders among conference guests here today might remember, I have an experience in the field of mergers, as I tried to merge the two state owned banks, Landsbanki and Bunadarbanki, but failed. So, I think that you will probably learn more about the topic from the specialists who will speak here later today and I should turn to more general subjects. But let me tell you one thing about mergers and acquisitions. The economics of scale might suggest that bigger is always better. But there is certainly a limit. The limit is when the company reaches a critical stage in which it has gained a dominant position in the market. When the company can act independently, without fearing that a competitor will take your customers away from you, the result is a loss for all consumers.
This is not a new reality. But have you ever thought of how difficult it is to create a competition in a small market like Iceland}s. Foreigners visiting me in the Ministry are often amazed to learn that we have more than one and more than two companies in most industries in a market of just 280 thousand people. Well, we need to. We have been able to create competition in most fields of Iceland}s economy although I and others would like more competition in certain fields. Competition keeps us going, creates better results and enhances the standard of living. Competition in politics keeps me going. Now we have even competition in higher education, thanks to the University of Akureyri and other recently created universities.

Ladies and gentlemen. As the Minister of Regional Affairs my mission is to secure the foundation of regional communites. I am convinced that the newly approved parliamentary resolution will be a stepping stone in that direction. Dynamic and diverse industries and cultural activities, access to good education and welfare services, together with low energy costs and good communications, are the preconditions for flourishing communites all around the country.
But of course the overall aim of the government is, and should always be, to create conditions for improved competitiveness for the whole country, not just for specific parts. Only when Iceland as a whole is competitive, can we expect to see our regional policy deliver positive results.
Iceland is very competitive. Iceland generally scores high in international comparison, especially in people skills and infrastructure. Iceland is very strategically located midway between North America and Europe. Through the country}s membership in the European Economic Area (EEA), companies can benefit from Iceland}s access to free movement of goods, service, labour and capital in the 360 million strong European market. Iceland has excellent, reliable logistic service which make importing and exporting easy. The flexible labour force is well educated and highly skilled, yet salary costs are reasonable when compared to neighbouring countries. Last but not least Iceland enjoys abundance of clean and competitively priced hydro and geothermal energy.

Dear conference guests. The main theme of the international week here at the University of Akureyri is International Business Strategies. Professors from eight countries are here to help to achieve the objective to enhance the student}s ability to construct multinational business strategies through prepared case studies. The importance of events like this for the local community cannot be overemphasized. This community like every other community has to evaluate its strenghts and weaknesses, threaths and opportunities. It has to utilise its comparable strenghts to be able to create a strong economy which will survive in the ever increasing global competitive environment.
I sincerely hope that this event will be successful.

Thank you very much.


Valgerður Sverrisdóttir