CCPC issues preliminary findings to organisations under investigation in the private motor insurance sector

September 17, 2020

The Competition and Consumer Protection Commission (CCPC) has today issued preliminary findings to five insurers, an insurance industry trade association and an insurance broker:

  1. AIG Europe S.A.
  2. Allianz PLC
  3. AXA Insurance DAC
  4. Aviva Insurance Limited
  5. FBD Insurance PLC
  6. Brokers Ireland, formerly the Irish Brokers Association
  7. AA Ireland Limited

The preliminary findings allege that these organisations engaged in anti-competitive cooperation over a 21-month period during 2015 and 2016. The alleged anti-competitive cooperation consisted of public announcements of future private motor insurance premium rises as well as other contacts between competitors, all of which reduced levels of competition between the parties. The CCPC’s findings are provisional and no conclusion should be drawn at this stage that there has been a breach of competition law.

In 2016, the CCPC commenced an investigation into suspected anti-competitive practices in the provision of private motor insurance in the State, contrary to section 4(1) of the Competition Act 2002, as amended (the “2002 Act”) and Article 101(1) of the Treaty on the Functioning of the European Union.

The anti-competitive cooperation activities under investigation include a practice which is commonly referred to as ‘price-signalling’. Price signalling occurs when businesses make their competitors aware that they intend to increase prices, in turn causing further price increases across the sector. Price signalling can happen in public, through announcements or comments on prices, or in private through direct contacts between companies. If a business knows that their competitor is increasing prices then they may be encouraged to also increase prices, since their customers are less likely to move to their competitor.

The CCPC acts to protect consumers and uses its statutory powers to bring anti-competitive practices to an end. Price signalling and other types of anti-competitive cooperation between competitors ultimately lead to increased prices for consumers. These practices are particularly harmful to consumers when they occur in sectors like private motor insurance where motorists are required by law to take out cover and cannot avoid price increases.

In the course of the investigation, the CCPC gathered a substantial amount of electronic material from relevant parties, as well as extensive oral testimony and documentary evidence through witness summons hearings and meetings. With the assistance of digital forensic tools, the CCPC conducted a detailed review and assessment of all of the evidence gathered, including information in the public domain such as press articles and financial reports. The CCPC has now issued preliminary findings to these organisations setting out its position that it has reasonable grounds to suspect that a breach of the law has occurred. The CCPC’s findings are provisional and no conclusion should be drawn at this stage that there has been a breach of competition law.

The relevant parties now have the opportunity to consider and respond to the preliminary findings. It is open to them, under section 14B of the 2002 Act, to engage with the CCPC to offer commitments regarding their future behaviour to address the CCPC’s competition concerns.  The CCPC will carefully consider any responses before deciding if it will bring civil court proceedings pursuant to section 14A(1) of the 2002 Act or to take some other course of action.

As the investigation is ongoing, no further information or comment can be provided at this time.

Notes:

One of the roles of the Competition and Consumer Protection Commission’s (CCPC) is to enforce Irish and EU competition law by investigating suspected breaches of the Competition Act 2002 (the “2002 Act”) or Articles 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”).

Section 4(1) of the 2002 Act and Article 101(1) TFEU prohibit anti-competitive agreements, concerted practices and decisions by associations of undertakings which have as their object or effect the prevention, restriction or distortion of competition. The investigation in question is being progressed under the CCPC’s civil enforcement regime rather than the criminal enforcement regime.  Section 14A of the 2002 Act gives the CCPC the power to bring civil proceedings in respect of conduct that is caught by section 4(1) of the 2002 Act and Article 101(1) of the TFEU.

Under the current civil competition enforcement regime, the CCPC communicates its preliminary findings on potential breaches of competition law to the parties concerned as part of the next stage in its investigative procedure. In particular, the preliminary findings are issued to the parties concerned in order to give them an opportunity to respond and to engage with the CCPC to offer commitments pursuant to section 14B of the 2002 Act.

Section 14B of the 2002 Act provides a mechanism whereby parties under investigation can avoid lengthy legal proceedings by agreeing to address the CCPC’s concerns by making clearly defined commitments regarding their future behaviour. This allows the CCPC to obtain enhanced protections for consumers without bearing the cost of full legal proceedings. Section 14B of the 2002 Act provides for the CCPC, with consent from the party under investigation, to apply to the High Court to make an order in the terms of such an agreement. Under section 14B of the 2002 Act, a party under investigation is not required to acknowledge that it has acted in violation of the prohibitions contained in the 2002 Act and/or the TFEU. Failure to comply with an order issued under section 14B of the 2002 Act constitutes contempt of court.

If appropriate remedies to address the suspected breaches of competition law cannot be achieved under section 14B, the CCPC may consider other appropriate actions, including, but not limited to, bringing civil court proceedings under section 14A of the 2002 Act.

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