On 24 March 2010, the European Commission adopted a new Block Exemption Regulation (“BER”) for the insurance sector.[1] The 2010 BER makes a number of significant changes to the completion law rules applicable to the insurance sector. In particular, while the block exemption continues to apply to certain types of information exchange and to co-insurance and co-(re)insurance pools, standard insurance policy conditions and technical specifications for security devices are no longer exempted from the prohibition on anti-competitive agreements. This article outlines the changes introduced by the 2010 BER and examines the potential impact these changes will have on the day-to-day operations of insurance companies within EU.
BACKGROUND
EU Competition Law
Article 101 (1) of the Treaty on the Functioning of the European Union (“EU Treaty”) prohibits “all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market”. According to Article 101 (3) of the EU Treaty, certain categories of agreements may be exempted from this prohibition if they “contribute to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit”.
1991 Council Regulation on application of competition law to insurance sector
In 1991, the Council of the European Union issued a Regulation empowering the European Commission to exempt certain categories of agreements in the insurance sector from the prohibition on anti-competitive agreements.[2] According to the Council, cooperation between companies in the insurance sector was deemed “desirable to ensure the proper functioning of this sector and may at the same time promote consumers’ interests”.[3] In particular, the Council highlighted the following types of insurance related agreements which may per se breach competition law rules, but which are nonetheless deemed necessary to ensure the proper functioning of the insurance sector: “agreements, decisions and concerted practices relating to the establishment of common risk premium tariffs based on collectively ascertained statistics or the number of claims, the establishment of standard policy conditions, common coverage of certain types of risks, the settlement of claims, the testing and acceptance of security devices, and registers of, and information on, aggravated risks.”[4] Moreover, the Council was clearly motivated by the large number of individual notifications regarding insurance related agreements submitted to the Commission for exemption from the competition law rules.[5]
1993 Block Exemption Regulation
On foot of the 1991 Council Regulation, the Commission adopted the first BER for the insurance industry in 1993.[6] The 1993 BER exempted the following four categories of agreements: (a) the establishment of common risk-premium tariffs based on collectively ascertained statistics or on the number of claims; (b) the establishment of standard policy conditions; (c) the common coverage of certain types of risks (i.e. co-(re)insurance pools); and (d) the establishment of common rules on the testing and acceptance of security devices.[7] The 1993 BER entered into force on 1 April 1993 and remained in force until 31 March 2003.
2003 Block Exemption Regulation
The 1993 BER was replaced by a new BER in 2003.[8] The 2003 BER was based on effectively the same categories of agreements, but introduced greater detail in the description of the scope of these categories. The focus in category (a) above was switched from the establishment of common tariffs to the joint establishment and distribution of calculations and tables and the joint carrying-out of studies. In relation to category (b), it was specified that the exemption applied to the joint establishment and distribution of non-binding standard policy conditions for direct insurance. The exemption of insurance and reinsurance pools was restricted to pools covering specific category of risks. Finally, a new category was introduced encompassing the joint establishment and distribution of non-binding models illustrating the profits to be realized from an insurance policy involving an element of capitalization. The 2003 BER entered into force on 1 April 2003 and applied until 31 March 2010.
Commission’s review of 2003 BER
In 2007, the Commission commenced a review of the functioning of the 2003 BER (the “Review”). By this stage the original justification for the Commission issuing block exemptions no longer applied. Originally, individual agreements could be submitted to the Commission for exemption under Article 85(3) of the EC Treaty. Where a large number of individual agreements were submitted within the same category of agreements, the Commission could adopt a block exemption to cover that entire category and hence avoid the need for submission of further individual agreements. This notification system was subsequently abolished as a result of Council Regulation 1/2003[9] on the implementation of the rules on competition.[10] Pursuant to Regulation 1/2003, agreements which satisfy the conditions of Article 101(3) of the EU Treaty are not prohibited, no prior decision to that effect being required. Undertakings and associations have since then themselves been required to assess whether their agreements are compatible with Article 101 of the EU Treaty. As a result, a number of block exemptions have not been renewed and today very few sectors any longer benefit from a block exemption.
In this context, the Commission took a first principles approach to the analysis of whether to renew the 2003 BER. The Commission began by consulting national competition authorities in 2007. In 2008, the Commission launched a public consultation and sent targeted questionnaires to certain stakeholders, public authorities and consumer organizations. This was followed by supplementary questionnaires sent to certain stakeholders including small and medium-sized insurers, pools and national federations of security device manufacturers.
The Commission asked the following questions: (i) whether the business risks or other issues in the insurance sector make it "special" and different to other sectors such that this leads to an enhanced need for cooperation; (ii) if so whether this enhanced need for cooperation requires a legal instrument such as for example, the BER to protect or facilitate it; and (iii) if so, whether the current BER is the most appropriate legal instrument.[11]
On 24 March 2009, the Commission adopted a Report to the European Parliament and Council (the “Report”)[12] which is accompanied by a detailed Working Document (the “Working Document”)[13]. The Report recommended that the BER be renewed in relation to joint calculations, tables and studies and in relation to pools, but not in relation to standard policy conditions or security devices. The Commission then held a public event on 2 June 2009 in order to hear further representations on the Report and accompanying Working Document.
NEW BLOCK EXEMPTION
Joint calculations, tables and studies
In accordance with the findings of the Report, the 2010 BER continues to exclude joint calculations, tables and studies from the application of Article 101(1) of the EU Treaty.[14] The Report noted a number of peculiarities in relation to the insurance sector which gave rise to an enhanced need for cooperation regarding joint calculations, tables and studies. It was noted that the cost of insurance products is unknown at the time the price is agreed and that this makes access to past statistical data crucial in order to technically price risk. The way in which risk is such a paramount factor in pricing insurance products differentiated the insurance sector from other sectors. Therefore, the Commission held that cooperation in this area is both specific to the insurance industry and necessary in order to price risks.[15]
The Commission noted further that cooperation in the calculation of risk enables entry of small and medium sized undertakings into the insurance market. Indeed, a number of small and medium sized insurers informed the Commission during the review that they would not have been able to enter the market without the use of this part of the BER. Moreover, it was found that cooperation on calculations, studies and tables increases cross border competition by facilitating access by foreign insurance entities. Large existing insurers also benefit in obtaining access to a broader statistical base enabling more accurate calculation of risk. If the block exemption was removed in relation to this category of agreements, the Commission noted the risk that insurers would no longer cooperate on joint calculations, tables and studies. Instead, larger insurers would compile their own statistics and, without the condition in the BER requiring calculations, tables and studies to be made available on reasonable and non-discriminatory terms, would have no incentive to share their statistics with smaller or foreign insurers.[16]
Accordingly, the 2010 BER renewed the exemption of this category of agreements. In so doing, however, the Commission made the following key changes: “(i) the term ‘joint calculations’ was changed to ‘joint compilations’ (which may also include some calculations); (ii) clarification that exchange of information is only allowed where it is necessary; and (iii) access to data shared is now also allowed for consumer organizations and customer organizations (as distinguished from individuals), with a public exception.”[17]
Standard policy conditions and models
The 2010 BER does not renew the block exemption in relation to standard policy conditions (“SPCs”) for direct insurance and non-binding models on profits. The Commission assessed the advantages and disadvantages of SPCs in the insurance sector. The Commission accepted that SPCs could give rise to positive effects for competition and consumers by ensuring that the costs incurred by insurers and in turn the premiums they charge to customers are kept low.[18] Moreover, SPCs enable consumers to compare insurance policies offered by different insurers, thereby making it easier for consumers to switch between insurers and insurance products.[19] On the other hand, the Commission observed that too much standardization can be harmful for consumers and can lead to a lack of non-price competition.[20]
Regardless of the possible advantages of SPCs, the fundamental question in the view of the Commission was whether SPCs were special to the insurance sector and therefore required a sector specific BER. In this regard, the Commission’s investigation revealed that SPCs are used in many sectors and are not particular to the insurance sector. The Commission highlighted the example of the banking sector where SPCs are commonly agreed between banks for standard services such as for instance money transfer, issuance of cards and use of ATMs. The absence of a BER, it was noted, has not caused “any tangible difficulties for banks”.[21] Hence, it was concluded that cooperation on SPCs is not specific to the insurance sector and as such does not objectively require a sector specific BER.[22]
The Commission further stated that many SPCs would not be classified as anti-competitive agreements under Article 101(1) of the EU Treaty and even where SPCs are so classified they will often comply with the exemption criteria of Article 101(3).[23] However, the Commission stated that since certain SPCs can be imbalanced, it is more appropriate that undertakings conduct their own assessment on the basis of Article 101(3) in order to demonstrate that the cooperation they are part of gives rise to efficiency gains, a fair share of which benefits customers.[24] The Commission saw no significant or real risk of less or non-cooperation in the event of a non-renewal of the BER.[25]
Accordingly, the 2010 BER does not renew the block exemption in relation to SPCs. Instead, the Commission has stated its intention to expand its Horizontal Guidelines[26] to address SPCs for all sectors. The guidelines are currently under review and a draft was due to be published for stakeholder consultation in the first half of 2010.[27]
Common coverage of certain types of risks (pools)
The 2010 BER continues to provide exemption to co-(re)insurance pools under certain amended conditions. As a result of its review, the Commission accepted that “risk sharing for certain types of risks (such as nuclear, terrorism and environmental risks), for which individual insurance companies are reluctant or unable to insure the entire risk alone, is crucial in order to ensure that all such risks can be covered.”[28] Furthermore, it was accepted that this requirement is specific to the insurance sector and gives rise to an enhanced need for cooperation.
The Commission agreed that pools can give rise to further positive effects such as the fact that they increase the availability of insurance products on the market and that cross-border pools create a more integrated insurance industry throughout the EU. Pools can also facilitate smaller and medium-sized insurers entering and remaining in the market and gaining the necessary experience of risks with which they are unfamiliar.[29]
In the event that the block exemption was not renewed in relation to pools, it was accepted that there would be a risk that insurance undertakings would not continue to cooperate within pools. The Commission further noted the fears of certain respondents that the consequence of a non-renewal of the BER would be that “some risks which are not attractive (such as nuclear risks) would no longer be covered, as this would not generate enough premium to justify the legal uncertainty.”[30]
Consequently, the Commission decided to renew the exemption subject, to a number of important changes. The 2010 BER exempts (i) co-(re)insurance pools covering new risks for a period of three years from the date of first establishment of the pool, (ii) co-insurance pools covering risks which are not new for as long as the BER remains in force provided the market share held by the participating undertakings does not exceed 20% of any relevant market, and (iii) co-reinsurance pools covering risks which are not new for as long as the BER remains in force provided the market share held by the participating undertakings does not exceed 25% of any relevant market.
In response to the feedback received during the Review, the 2010 BER includes an amended and expanded definition of “new risks”. Whereas the definition of “new risks” in the 2003 BER was limited to “risks which did not exist before, and for which insurance cover requires the development of an entirely new insurance product”[31], the 2010 BER provides that “in exceptional circumstances, a risk may be considered as a new risk where an objective analysis indicates that the nature of the risk has changed so materially that it is not possible to know in advance what subscription capacity is necessary in order to cover such a risk.”[32]
Furthermore, the 2010 BER contains a new method for calculating market share. Under the 1993 BER, market share was calculated by taking into account the members’ “global turnover in the relevant insurance market, irrespective of whether they do their business through the pools or independently”[33]. As an exception to this rule, market share regarding the coverage of catastrophic or aggravated risks was calculated on the basis of “the insurance products brought into the up”[34] i.e. the members’ turnover within the pool itself. The 2003 BER followed this latter approach providing that market shares were to be calculated taking into account the insurance products underwritten within the pool by the participating undertakings, on the basis of the gross premium income of the preceding calendar year.[35] In the Report, the Commission noted that this methodology for calculating market shares was more generous for co-(re)insurance pools as the turnover achieved by the participating undertakings outside the co-(re)insurance pool in the relevant insurance market is not taken into account.[36] The Commission described this methodology as not being in line with other general and sector-specific competition rules on the assessment of horizontal cooperation, essentially amounting to preferential treatment of the insurance sector.[37] In order to bring the block exemption in line with the rules on other forms of horizontal cooperation, the 2010 BER now provides that market share shall include the market share of the participating undertaking within the pool in question and within another pool on the same relevant market, as well as the market share of the participating undertaking on the same relevant market outside any pool.[38]
Security devices
The 2010 BER no longer contains an exemption of technical specifications regarding security devices. The 2003 BER exempted (i) technical specifications, rules or codes of practice regarding security devices and procedures for assessing and approving their compliance with these standards; as well as (ii) technical specifications, rules or codes of practice for the installation and maintenance of security devices and procedures for assessing and approving the compliance of undertakings which install or maintain security devices with such standards. Such agreements were covered by the block exemption in so far as no EU-level harmonization existed.
Based on its review of the 2003 BER, the Commission found that agreements on technical specifications for security devices fall into the general domain of standard setting, which is not unique to the insurance sector.[39] The Commission, therefore, questioned whether a block exemption was necessary to protect this form of cooperation. In the Commission’s view, it was more appropriate that guidance is afforded to the industry as a whole and in the form of a horizontal instrument.[40] The Commission noted that such guidance is already provided in point 6 of the Horizontal Guidelines which provides guidance on the compliance of technical standards with Article 101 of the Treaty.[41]
Furthermore, the Commission highlighted that the exemption of technical specifications for security devices under the 2003 BER was restricted to areas where no EU-level harmonization existed. Compared to the situation in 2003, EU harmonization in this area is now extensive and increasing. The Commission noted, for example, that approximately 90 EU harmonized standards concerning fire detection and fire alarm systems as well as fixed fire fighting systems have already been published and at least another 30 EU-harmonized standards are currently under development for categories of construction products.[42] This leaves very little remaining scope for agreements on technical specifications for security devices to benefit from the block exemption.
Moreover, an important complaint regarding the block exemption of technical standards for security devices was noted by the Commission during the Business Insurance Sector Inquiry. Certain manufacturers of security devices and companies providing installation and maintenance services complained of being excluded from markets in the event that they did not comply with the national technical specifications set by insurers. These complaints were confirmed during the Review where the Commission concluded that the BER encourages the “de facto adoption of infra-European industry standards, which may be an obstacle to the free movement of goods and services. In most Member States only installation and services from regional or national operating “approved” suppliers, using “approved” devices are accepted by insurance companies usually organized within their national associations.”[43] Moreover, it was noted that “the high costs of multiple texting and multiple certification is a significant barrier to marketing new and innovative products in the EU market.”[44]
In light of the above, the Commission concluded that the scope of the block exemption of technical specifications for security devices was reduced since harmonization is now extensive. As regards the limited area where there is not yet EU harmonization, detailed national rules arising out of the BER result in fragmentation of the internal market, reduction of competition between producers of security devices across the Member States and less choice for consumers.[45] It was accordingly decided not to renew the block exemption.
IMPLICATIONS FOR THE INDUSTRY
In general, it can be said that the 2010 BER places greater responsibility on insurance companies to assess the potential anti-competitive effects of their agreements and concerted practices as well as the potential anti-competitive effects of decisions of national insurance federations. Insurance undertakings will be required to carefully assess their co-operation on joint compilations, tables and studies and co-(re)insurance pools in order to ensure that they comply with the new conditions set out in the 2010 BER. In the absence of a BER covering SPCs and security devices, insurance companies will be required to carry out individual assessments in order to determine whether their cooperation in these areas restrict competition in breach of Article 101 (1) of the EU Treaty and if so, whether they can benefit from the general exemption in Article 101 (3) of the EU Treaty. In carrying out such assessments, insurance companies will find assistance in the Horizontal Guidelines and the Guidelines on the application of Article 81(3) of the Treaty[46].
Joint compilations, tables and studies
Specifically, in relation to joint compilations, tables and studies, the insurance sector will welcome the extended application of the BER to this category of agreements. Co-operation in this area should continue to facilitate market access for small and medium sized insurance companies as well as facilitating market entry for foreign insurance companies. Insurance companies must, however, pay attention to the BER’s amended conditions. The inclusion of a clarification that exchange of information is only allowed where it is necessary indicates the Commission’s intention to curtail blanket application of the BER to joint calculations, tables and studies. The regulation provides no clarification, however, on the meaning of the word “necessary”. One interpretation is that since the justification for permitting the exchange of information in the form of joint compilations, tables and studies under the BER is the facilitation of risk assessment and premium setting, insurance companies must ensure that the particular co-operation they are engaging in is necessary for this purpose.[47]
Consumer organizations and customer organizations will no doubt seek to avail of their new right of access to joint compilations, tables and studies shared between insurance companies. This right of access was introduced by the Commission for the express purpose of increasing transparency in this area.[48] The final novelty introduced by the 2010 BER whereby the term “joint calculations” was changed to “joint compilations” seems to provide no material amendment to the scope of the exemption.
Standard policy conditions and models
During the Review of the functioning of the 2003 BER, a number of respondents argued that non-renewal of the BER with respect to SPCs will result in legal uncertainty in the industry.[49] Insurance companies will reduce their level of co-operation in the area of SPCs due to the increased risk of challenge by the Commission. According to the CEA, reduced co-operation on SPCs will lead to significant disadvantages for insurance undertakings and customers.[50] In particular, market entrants and small to medium sized insurance undertakings will suffer from the removal of the BER. These companies rely heavily upon SPCs and the resulting cost benefit in not having to employ legal staff to prepare new general conditions and update existing general conditions. The increased costs resulting from the non-renewal of the BER will have to be passed on to customers of smaller insurance companies, thus making their insurance products more expensive and less competitive in comparison to the products of the larger insurance companies.[51]
The CEA further argues that market entrants from foreign countries will be placed at a disadvantage. The different national regulatory frameworks render it impossible to simply translate foreign insurance policy terms. No longer able to rely upon SPCs as a starting point, foreign insurers will have to incur significant additional costs in producing insurance policy terms compliant with the national regulatory framework of the new markets into which they are entering. These increased investments costs will thus reduce market access and decrease competition.[52]
Moreover, insurance customers will suffer from the non-renewal of the BER according to the CEA. SPCs create transparency for the customer and allow benchmarking. In the absence of SPCs, there will be a greater need for customers to negotiate their insurance policy terms separately with different insurers. Moreover, SPCs create legal certainty enabling customers to rely on the validity of their policy terms. Without such certainty, the CEA suggests that customers may be faced with retrospective adjustments or even terminations of their insurance contracts where clauses are subsequently found to be unlawful.[53]
The Commission, on the other hand, sees no significant or real risk of less or non-co-operation on SPCs as a result of the non-renewal of the BER. According to the Commission, non-renewal of the BER should not affect the legal status of SPCs within the insurance industry. Firstly, the Commission states that insurance SPCs would, in most cases, be unlikely to fall within the prohibition against anti-competitive agreements in Article 101(1).[54] Secondly, the Commission points out that the BER is merely “an application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices in the insurance sector”[55]. In the absence of the BER, Article 101 (3) of the EU Treaty will remain applicable to SPCs. Given this fact and based on the evidence gathered by the Commission during the Review, the Commission concludes that it is unlikely to consider an SPC previously covered by the BER as incompatible with Article 101(3) of the EU Treaty.[56]
It remains to be seen whether the potential negative consequences of non-renewal of the BER highlighted above in fact materialize. This will depend upon whether insurance undertakings continue their current level of co-operation with respect to SPCs. The non-renewal is likely to result in some uncertainty in the industry, at least in the short term. However, the clear indications from the Commission on the continued legality of SPCs previously covered by the BER should ultimately offset much of this uncertainty. In the long term, it is hoped that co-operation will continue with respect to SPCs, but with a greater sense of responsibility and consciousness on the part of insurance companies as to the dividing line between lawful and anti-competitive behavior.
Common coverage of certain types of risks
The renewal of the BER with respect to the common coverage of certain types of risks will be met with a positive response within the industry. The BER will continue to provide legal certainty regarding co-operation in the form of co-(re)insurance pools thus ensuring ongoing coverage of those risks for which individual insurance companies are reluctant or unable to insure alone.
The expanded definition of “new risk” may on its face be seen as a timely and important enlargement of the scope of the BER. The definition in the 2003 BER had been criticized as being unclear and overly restrictive insofar as it did not accept as new risks those risks whose frequency and severity are increasing, such as terrorism and climate change.[57] The 2010 BER takes a step in this direction by including within the definition of new risks, risks which have changed so materially that it is not possible to know in advance what subscription capacity is necessary in order to cover the risk. This new wording is, however, far from clear and is expressly limited in its application to “exceptional circumstances” requiring an “objective analysis”. It is envisaged that insurance companies will have difficulty in assessing which risks are covered by this new definition and hence any potential for expansion of the scope of the BER will be limited.
The new market share calculations will undoubtedly result in a limitation of the scope of the BER with respect to non-new risks. Taking account of a participating insurance company’s share of the entire relevant market both within and outside the pool will increase the number of companies exceeding the 20% threshold for co-insurance pools and the 25% threshold for co-reinsurance pools. Insurance companies will further be required to conduct more careful analysis of the relevant product and geographic market in order to assess compliance with these market share thresholds.
With regard to compliance, the Commission noted how the Review showed that many insurers were incorrectly using the pool exemption in the BER as a “blanket” exemption without carrying out the required careful legal assessment of the pool’s compliance with the conditions of the BER.[58] The Commission highlighted the fact that there are three types of pools and emphasized that it is the responsibility of the participating undertakings to determine into which category a particular pool falls: “(i) pools which do not require a BER as a safe harbor because they do not give rise to a restriction of competition as long as the pooling is necessary to allow their members to provide a type of insurance that they could not provide along; (ii) pools which fall under Article 101(1) of the Treaty and which do not comply with the conditions of the new BER but may benefit from an individual exemption under Article 101(3) of the Treaty; (iii) pools which fall under Article 101(1) of the Treaty but which comply with the conditions of the BER”[59].
The Commission further took the opportunity to remind insurance companies that ad hoc co-(re)insurance agreements on the subscription market have never been covered by the BER and that they remain outside the scope of the 2010 BER.[60] In this context, the Commission further highlighted its findings from the Business Insurance Sector Inquiry that co-(re)insurance on the subscription market usually involves premium alignment which may restrict competition and may not be justified under Article 101(3).[61]
In light of the above, the Commission warns that it intends to closely monitor, in cooperation with national competition authorities, the operation of pools to ensure that blanket applications of the BER or Article 101(3) of the EU Treaty are not occurring. This closer monitoring will be undertaken in line with enforcement cases where pools are found to breach Article 101(1) of the EU Treaty.[62] With such increased scrutiny from the Commission, insurance companies will have little choice but to implement enhanced review and control with respect to the compatibility of their participation in co-(re)insurance pools with Articles 101(1) and 101(3) of the EU Treaty.
Security devices
The non-renewal of the BER with respect to security devices has the potential to significantly change current practices regarding agreements on technical specifications and standards in this area. At present, national standards on security devices are established by the insurance sector in many EU Member States and controlled by national certification bodies. As stated above, the Commission has found this system to create significant barriers to marketing new and innovative security products within the EU. In the absence of the BER, the system of national standard setting and certification will have to change.
On a European level, the CEA provides specification on security devices regarding fire protection systems and security protection systems. In light of the non-renewal of the BER, the CEA has indicated that it will “seriously consider ceasing its activities in the field of security devices so as to avoid the risk that the specifications which the CEA invests are afterwards challenged by the competition authorities”[63].
In the absence of the BER, Point 6 of the Horizontal Guidelines will be the primary source of guidance with regard to agreements between insurance companies regarding technical specifications for security devices.[64] The Horizontal Guidelines cover standardisation agreements which have as their primary objective “the definition of technical or quality requirements with which current or future products, production processes or methods may comply”[65]. Agreements to set standards may be either concluded between private undertakings or set under the aegis of public bodies.[66] The Guidelines divide standardisation agreements into three categories.
1. Agreements that do not fall under Article 101(1)
Where participation in standard setting is “unrestricted and transparent” and where there is no obligation to comply with a standard, such standard does not restrict competition.[67]
2. Agreements that almost always fall under Article 101(1)
Agreements that use a standard as a means amongst other parts of a broader restrictive agreement aimed at excluding competitors will almost always be caught by Article 101(1).[68]
3. Agreements that may fall under Article 101(1)
Standardisation agreements may restrict competition where they prevent the parties from either developing alternative standards or commercializing products that do not comply with the standard. Agreements that entrust certain bodies with the exclusive right to test compliance with the standard go beyond the primary objective of defining the standard and may also restrict competition.[69]
In the event that an agreement on standards is found to breach Article 101(1), it may still benefit from the exemption under Article 101(3). In such case, the agreement should lead to technical or economic benefits. It should not limit innovation. The necessary information to apply the standard must be available to those wishing to enter the market on fair, reasonable and non-discriminatory terms.[70] Participation in standard setting should be open to all competitors in the market affected by the standard.[71]
In summary, in order to avoid breaching competition law rules, agreements between insurance companies on standards for security devices must now:
- be unrestricted, in the sense that all competitors in the market must be allowed participate
- be transparent, in the sense that the standards must be available on fair and reasonable terms to all competitors on the market including those wishing to enter the market, and
- not limit innovation, but rather lead to technical or economic benefits on the market. National insurance organizations will be required to review and where necessary amend their national standard setting and certification procedures in order to comply with the above requirements.
Finally, it is to be expected that the ongoing EU-level harmonisation in the area of technical specifications for security devices will continue. As mentioned above, there now exists an extensive body of EU harmonized standards concerning fire detection and fire alarm systems, while a large number of EU-harmonized standards are currently under development in the area of construction products. These harmonized standards will have to be applied on a national level and will, in themselves, increase transparency and reduce the scope for national standards and certification procedures.
William McKechnie, Barrister-at-law (LLB.LingGerm), Senior Legal Counsel, Corporate Legal Department, If P&C Insurance Ltd, 106 80 Stockholm, william.mckechnie@if.se
[1] Commission Regulation (EU) No 267/2010 of 24 March 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of agreements, decisions and concerted practices in the insurance sector. OJ L 83, 30.3.2010, p.1.
[2] Council Regulation EEC No 1534/91, OJ L 143 7.6.1991, p.1.
[3] Council Regulation EEC No 1534/91, recitals.
[4] Council Regulation EEC No 1534/91, recitals.
[5] Council Regulation EEC No 1534/91, recitals.
[6] Commission Regulation (EEC) No 3932/92, OJ L 398, 31.12.1992, p.7.
[7] Commission Regulation (EEC) No 3932/92, Article 1.
[8] Commission Regulation (EC) No 358/2003 of 27 February 2003, OJ L 53, 28.2.2003, p.8.
[9] Council Regulation (EC) No 1/2003, OJ L 1, 4.1.2003, 1.
[10] Implemented in the insurance sector on 1 May 2004
[11] See Review of Insurance Block Exemption Regulation, http://ec.europa.eu/competition/sectors/financial_services/insurance.html#review
[12] COM/2009/0138.
[13] Commission Staff Working Document accompanying the Report from the Commission to the European Parliament and the Council on the functioning of Commission Regulation (EC) No 358/2003 on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices in the insurance sector.
[14] Regulation 267/2010, Article 2.
[15] Working Document, Chapter II, Section 2.1.
[16] Working Document, Chapter II, Section 2.2.
[17] Communication from the Commission on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of agreements, decisions and concerted practices in the insurance sector, OJ C 82/02, para. 10.
[18] Working Document, Chapter III, Section 2.1.
[19] Communication, para. 23.
[20] Communication, para. 23.
[21] Working Document, Chapter III, Section 2.1.
[22] Working Document, Chapter III, Section 2.2.
[23] Working Document, Chapter III, Sections 2.3 and 2.4.
[24] Communication, para. 23.
[25] Working Document, Chapter III, Section 2.4.
[26] Guidelines on the applicability of Article 81 of the EC Treaty to horizontal cooperation agreements
(2001/C 3/02).
[27] Communication, para. 24.
[28] Communication, para. 12.
[29] Working Document, Chapter IV, Section 2.2.4.
[30] Working Document, Chapter IV, Section 2.2.5.
[31] Regulation 358/2003, Article 2.7.
[32] Regulation 267/2010, Recital 16, Article 1.6.
[33] Regulation 3932/92, Article 11.1.
[34] Regulation 3932/92, Article 11.2.
[35] Regulation 358/2003, Articles 7.2 and 7.3.
[36] Working Document, Chapter IV, Section 2.2.
[37] Working Document, Chapter IV, Section 2.2.
[38] Regulation 267/2010, Article 6.3.
[39] Report, para. 24.
[40] Communication, para. 26.
[41] Communication, para. 26.
[42] Report, para. 27.
[43] Report, para. 25.
[44] Report, para. 25.
[45] Report, para. 27.
[46] OJ C 101, 27.4.2004, p. 97.
[47] Regulation 267/2010, Recital 9.
[48] Communication, para. 73.
[49] Working Document, Chapter III, Section 2.4.
[50] CEA Position Paper; CEA response to the European Commission’s Consultation on the Insurance Block Exemption Regulation, 17 July 2008.
[51] CEA Position Paper, Section IV.
[52] CEA Position Paper, Section IV.
[53] CEA Position Paper, Section IV.
[54] Working Document, Chapter III, Section 2.3.1.
[55] Working Document, Chapter III, Section 2.3.
[56] Working Document, Chapter III, Section 2.3.
[57] CEA Position Paper, Section V.
[58] Communication, para. 16.
[59] Communication, para. 14.
[60] Communication, para. 17.
[61] Communication, para. 17, Report, Chapter IV, Section 1.3.
[62] Communication, para. 18.
[63] CEA Position Paper, Section VI.
[64] The Commission has signaled that the Horizontal Guidelines are currently under review and that it plans to publish a draft of the revised Horizontal Guidelines for stakeholder consultation during the first half of 2010, see Communication, para. 26.
[65] Horizontal Guidelines, para. 159.
[66] Horizontal Guidelines, para. 162.
[67] Horizontal Guidelines, para. 163.
[68] Horizontal Guidelines, para. 165.
[69] Horizontal Guidelines, para. 167.
[70] Horizontal Guidelines, paras. 169, 174.
[71] Horizontal Guidelines, para. 172.