European Commission Opens Public Consultation On The Renewal Of The Block Exemption Regulation For The Insurance Sector

Author:Mr Guy Soussan
Profession:Steptoe & Johnson
 
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Background

Directorate General for Competition of the European

Commission ("DGCOMP") recently launched a public

consultation on the sector's current exemption from

competition rules (known as the "block exemption

Regulation" or "BER").

Competition Commissioner Kroes stated that its purpose is to

assess "whether there are sufficient grounds to

renew" the BER.

The final report published in September 2007 by the European

Commission on its inquiry into competition in the business

insurance sector already indicated that exemption may no longer

be justified when the BER expires in March 2010.

This briefing sets out details of the public consultation

and comments on its objectives and how market operators should

present their views.

Introduction

The European Commission has indicated that, to date, it has

not received compelling arguments from industry to justify

renewal. The preliminary view is that the non-renewal of the

BER should not affect the business practices that the BER

currently covers.

Under a 2003 antitrust reform package, businesses have to

self-assess whether their business practices comply with EC

competition rules. In this regard, DGCOMP has increasingly

perceived sector specific regulations as an anachronism;

compared to other industries, there appears to be no need for

special antitrust treatment of the insurance sector.

Scope of the Commission's review

The European Commission's consultation seeks information

from insurers and stakeholders on how the business practices of

the industry would be affected without a block exemption. If

the industry can provide convincing evidence that the

withdrawal of the block exemption is likely to discourage the

industry from entering into legitimate cooperative agreements,

then the Commission will be prepared to engage a debate on the

extension of the block exemption. Industry contributions to the

questions set out by the Commission in its paper launching the

consultation should thus enable the Commission to balance the

economic efficiencies and consumer benefits brought about by

the BER against any anticompetitive deficiencies.

While the consultation does not seek to erase 15 years of

experience of legitimate cooperation among insurers in the

matters covered by the BER, i.e. joint calculation of pure

premiums, standard/model terms and conditions, insurance pools,

and security devices, the Commission's review should

nevertheless focus on the substantive aspects of these

arrangements.

Pure...

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