Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE  
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel,  BELGIË  
 
Tel: +32 229 -91111. Fax: +32 229 -64301. E -mail: COMP -MERG ER-REGISTRY@ec.europa.eu . 
 EUROPEAN COMMISSION  
 
 
 
 
 
Brussels,  20.12.2018  
C(2018 ) 9200 final  
  
 
 
To the notifying part y: 
Subject : Case M. 9127  – Carlyle / Sedgwick  
Commission decision pursuant to Article 6(1)(b) of Council 
Regulation No  139/20041 and Article 57 of the Agreement on the 
European Economic Area2 
Dear Sir or Madam,  
(1) On 16 November 2018 , the European Commission received notification of a 
proposed concentration pursuant to Article 4 of the Merger Regulation by which  
funds managed by affiliates of  The Carlyle Group L.P. (“Carlyle”) acquires 
within the meaning of Article 3(1)(b ) of the Merger Regulation sole control o f 
the whole of Sedgwick , Inc. (“Sedgwick”) by way of purchase of shares (“the 
Transaction”) . Carlyle is referred hereinafter as the "Notifying Party" and, 
together with Sedgwick , the "Parties ". 
1. THE PARTIES  
(2) Carlyle i s a global alternative asset manager, managing funds that invest globally.  
Carlyle's portfolio of companies include s in particular The Innovation Group  Ltd 
(“Innovation Group”) , a company active in third party administration  ("TPA")  
insurance claims management and loss adjusting services.  
(3) Sedgwick is a global provider of risk management solutions  focusing primarily on 
providing insurance -related services to insurers, self -insured corporations, 
governmental authorities , etc. Sedgwick  provides inter alia  loss adjusting, TPA 
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation '). With effect from 1 December 2009,  the Treaty on 
the Functioning of the European Union ( 'TFEU ') has introduced certain changes, such as the 
replacement of  'Community ' by 'Union ' and 'common market ' by 'internal market '. The terminology of 
the TFEU will be used throughout this decision.  
2  OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').  In the published version of this decision, some 
information has been omitted pursuant to Article 
17(2) of Council Regulation (EC) No 139/2004  
concerning non -disclosure of business secrets and 
other confidential information. The omissions are 
shown thus […]. Where possible the information 
omitted has been replaced by ranges of figures or a 
general description.  PUBLIC VERSION  
 
 
2 insurance claims management, loss consultancy and property reinstatement 
services.3  
2. THE OPERATION  
(4) The notified concentration consists of the acquisition of indirect sole control by 
Carlyle over Sedgwick. Carlyle Pa rtners VII Cayman L.P. and Carlyle Global 
Financial Services partners III L.P., funds managed by affiliates of Carlyle will 
indirectly hold an approximately […] and […] interest in Sedgwick. The 
remaining minority shares will be  split between Caisse de dép ôt et placement du 
Quebec ( "CDPQ ") and Stone Point Capital LLC. , an investment fund, which will 
not hold, either individually or collectively, any veto right on strategic decision s. 
(5) Therefore, the Transaction qualifies as a concentration within the meaning  of 
Article 3(1)(b) of the Merger Regulation.  
3. EU DIMENSION  
(6) The undertakings concerned have a combined aggregate worldwide  turnover of 
more than EUR 5 000 million4 (Carlyle: EUR […] million; Sedgwick EUR  […] 
million) . Each of them has a n EU-wide turnover in  excess of EUR 250 million  
(Carlyle EUR […] million; Sedgwick: […] million) , but they do not achieve more 
than two -thirds of their aggregate EU-wide turnover within  one and the same 
Member State.  
(7) The Transaction therefore has a Union dimension pursuant to Article 1(3) of the 
Merger Regulation . 
4. RELEVANT MARKETS  
(8) The Transaction gives rise to horizontal overlaps between Se dgwick and  
Innovation Group  (a Carlyle portfolio company)  regarding the provision of loss 
adjusting (“LA”) services  in the United Kingdom an d Germany .5 While Sedgwick 
provides LA services for a wide variety of risks , Innovation Group’s operations 
essentially focus on the subsidence  risk,6 which accounts for more than [80-
100%]  of its LA business.  
(9) The Transaction also leads to a potential  vertical link in Ireland  and in the UK  
between the upstream provision of TPA and LA services by Sedgwick and the 
                                                 
3  Sedgwick recently acquired sole control over Cunningham Lindsay (see case M.8764 – Sedgw ick/ 
Cunningham Lindsay ). 
4  Turnover calculated in accordance with Article 5 of the Merger Regulation .  
5  The Transaction also gives rise to limited overlaps with respect to the provision of (i) third party 
administration ( "TPA ") claims management services  in the UK and (ii) business process management 
and business process outsourcing  in Ireland. These overlaps do not give rise to affected markets under 
any plausible market definitions and therefore will not be further discussed in this decision.  
6  Subsidence occurs when shifts in the ground cause movement s in a building’s foundation s, causing 
damage to the building . 
 
 
3 downstream insurance brokerage activities of PIB Ltd ("PIB", another portfolio 
company  of Carlyle ).7 
4.1. Product market definition  
4.1.1.  Loss adjusting  ("LA")  
(10) LA services involve the provision of inspection services related to claims 
processing, which typically consists of sending an inspector to the site of the loss 
to assess whether the insurer is obligated to pay the insured (or to pay a third 
party on behal f of the insure d), to quantify th e insurer’s exposure, and to 
determine whether the insurer can recover payment from a third party. Most field 
inspections are performed by third party loss adjusters (such as Sedgwick and 
Innovation Group ), but may be perfo rmed by an insurer or self -insured 
corporation using in -house claims inspectors. Claims that require field inspection 
range from small scale commercial or homeowner claims to large and complex 
industrial losses stemming from catastrophes and natural disast ers.  
(11) In previous cases,8 the Commission considered that LA services may belong to a 
separate product market from other insurance -related services. In 
Sedgwick/Cunningham Lindsey ,9 the Commission also envisaged to further 
segment LA services (i) depending on the type of claims , distinguishing 
property10 and casualty11 LA services  and, within property, between commercial 
and personal property LA , and (ii) distin guishing between in -house and external 
LA services . Conversely, the Commission did not consider a sub-segmentation of 
LA services by type of risks and , thus,  did not  assess whether the subsidence risk 
forms a distinct market segment within property LA (or within personal and 
commercial property LA).  The exact scope of the product market definition was 
ultimately left open.  
(12) The Notifying Party agrees with the previous assessment of the Commission and 
submits that the exact product market definition for LA services can be left open 
since  the Transaction does not raise serious doubts under any plausible pr oduct 
market definitions envisaged in the Commission's past decisional practice .  
(13) The Notifying Party also submits that subsidence LA  is an integral part of 
property LA and does not constitute a distinct product market . It is argued that a 
sub-segmentation  of property LA by type of risks (such as subsidence) is not 
reflective of market reality notably on the grounds that (i) the major players  
                                                 
7  There are also potential supply relationships in the UK between (i) the provision of TPA claim 
management services by Sedgwick and (ii) the activities of two other Carlyle portfolio companies, 
namely NARS (a provider of car repair and maintenance services) and Bardon (an insurance 
distributor). These potential vertical links do not give rise to affected markets, under any plausible 
market definitions, and therefore will not be further assessed in this decision.  
8  See M.6752 – CVC /Cunningham Lindsey Group  and M.8764 - Sedgwick/Cunningham Lindsey.   
9  See M.8764 - Sedgwick/Cunningham Lindsey.   
10  Property LA services relate to property insurance, which is a policy that provides financial 
reimbursement to the owner or renter of a structure and its content, in the event of damage or theft. 
Property insurance can be written for both personal property (e.g. homeowners and renters) and 
commer cial property (e.g. factories). The property segment comprises a range of different types of 
risks , such as fire, theft, accidental damage, subsidence, and escape of water.  
11  Casualty LA services related to casualty insurance, which is mainly liability co verage of an individual 
or organisation for negligent acts or omissions property and casualty.  
 
 
4 provide an integrated offer of services across different types of risks  and (ii) the 
claims management process is la rgely the same across the spectrum of risks  
(requiring the same assets, skills and processes regardless of the risk ). The 
Notifying Party acknowledges that, f or certain risks , there may be a certain degree 
of expert specialisation to assess the damage  but claims that experts can easily be 
cross -trained or re -trained for distinct risks depending on the LA needs.  
(14) The results of the market investigation where not conclusive as to whether 
subsidence LA services constitute a distinct product market. For ins tance, several 
competitors consider subsidence as an integral part of property LA  but the 
remaining respondents took th e opposite view indicating that subsidence is a 
separate business line due notably to the need for experts  (such as Chartered 
Surveyors o r engineers).12 Although most competitors consider that subsidence is 
not a distinguishing feature when competing for LA contracts13 and most 
customers source subsidence and property LA services from the same supplier,14 
the market investigation revealed the existence of specific tenders and panels15 for 
subsidence LA16, as well as the existence of LA providers specialised in 
subsidence  (such as Maule  and Innovation Group ). 
(15) As regards the distinction between personal and commercial subsidence LA 
services, market participants indicated that this segmentation is not relevant  and 
that the requirements to be active in subsidence LA are the same for both 
commercial and personal su bsidence LA17. For instance, one respondent indicated 
that "The technical aspects of subsidence are the same in both personal and 
commercial ", although he recognised that "commercial is more complex ".  
(16) For the purpose of this decision, and based on the abov e, the Commission 
considers the provision of subsidence LA services should not be segmented 
further between commercial and personal property subsidence. The Commission 
also conclude s that the precise product market definition fo r property LA services  
can b e left open as to:  (i) whether a distinction should be made between personal 
and commercial property LA ; (ii) whether subsidence LA is a part of LA services 
or a separate sub -segment ; and (iii) whether the relevant market should comprise 
also in -house LA s ervices . This is because the Transaction does not raise serious 
doubts as to its compatibility with the internal market regardless of the exact 
product market definition.   
4.1.2.  Third Party Administration ("TPA") claims management  
(17) Claim management services involve the administration of insurance claims. TPA 
claims management service providers replicate all or part of an insurer's internal 
claims management process, including first notification of loss, initial analysis of 
                                                 
12  See r eplies to question 6 of questionnaire Q2  to competitors.  
13  See r eplies to question 9 of questionnaire Q2  to competitors.  
14  See notably replies to question Q8 of questionnaire Q1 to customers.  
15  A panels is a business arrangement whereby a customer, generally an insurer, enters into contracts 
with a fixed number of suppliers to perform certain LA work that it has decided to outsource to third 
party service providers (see M.8764 – Sedgwick/Cunningham Lindsey , para. 30).  
16  See r eplies to question 22 of questionnaire Q2  to competitors and replies to question 13 of 
questionnaire Q1 to customers . 
17  See r eplies to q uestion 7 of questionnaire Q2 to compet itors. 
 
 
5 claim and distribution to appropriate personnel for processing, negotiation and 
settlement, payment, providing management information and data, and recovery.  
(18) In previous cases,18 the Commission found that TPA claim management services 
belong to a separate product ma rket. The Commission also envisaged to further 
segment this market (i) depending on the type of claims, distinguishing property, 
casualty and motor claims management services, and within property, between 
commercial and personal property claims management,  and (ii) distinguishing 
between in -house and external claims management The Commission ultimately 
left the exact product market definition open.  
(19) The Notifying Party agrees with the previous assessment of the Commission.  
(20) For the purpose of this Decision,  the Commission considers that the exact 
delineation of the market for the provision of TPA claims management services 
can be left open along the lines described above since no serious doubts as to the 
compatibility of the Transaction with the internal mar ket arise under any plausible 
product market definition.  
4.1.3.  Insurance distribution  
(21) In previous cases,19 the Commission  considered  the existence  of a downstream 
market for insurance distribution.  The Commission analysed  whether the market 
for insurance distrib ution comprises only outward distribution channels or 
whether it should also be considered to include the sales force  and office  
networks  of the insurer  (i.e. direct  sales).  This question  was ultimately  left open.  
The Commission  also considered  whether  a distinction  could  be made  between  
the market  for the distribution  of life and non-life insurance  products,  but 
ultimately  left the market  definition  open  in this respect.  
(22) The Notifying Party does not propose an alternative product market definition.   
(23) For the purpose  of this Decision,  the exact  product  market  definition  for insurance  
distribution  can be left open  along the lines described above as the Transaction  
does not raise serious doubts as to its compatibility with the internal market  under 
any plausible market definition.  
4.2. Geographic market definition  
4.2.1.  LA and TPA claims management  
(24) In terms of  geographic scope, in previous cases the Commission found that the 
markets for LA services and TPA claim management services (and their potential 
sub-segments) could be national or possibly limited to the UK/Ireland cluster .20 
The Commission ultimately left the exact geographic scope of the market open, 
and in particular whether (i) the UK and Ireland should be considered together or 
separately and (ii) whether Northern Ireland should belong to  the same 
geographic market as the  UK or as Ireland.  
                                                 
18  See M.6752 – CVC /Cunningham Lindsey and M.8764 – Sedgwick/Cunningham Lindsey.  
19  See M.8617 – Allianz/LV General Insurance Businesses , M.6957 – IF P&C/Topdanmark  and M.6053 
– CVC/Apollo/Brit Insurance . 
20  See M.6752 – CVC/Cunningham Lindsey Group  and M.8764 – Sedgwick/Cunningham Lindsey . 
 
 
6 (25) The Notifying Party submit s that, although there are no material legal or 
regulatory barriers to cro ss-border activity , national legal requirements  (e.g. 
expert accreditation/qualification) and knowledge of local insurance law are key 
requirements . The Notifying Party also consider s that providers of LA and TPA 
services typically need to have employees at national level who can liaise locally 
with customer and undertake site visits when field inspections are necessary. In 
any event, the Notifying Party submit s that the geographic scope of the market 
can be left open.  
(26) For the purpose of this Decision, the Commission considers that the exact 
geographic scope of the market s for LA and TPA claim management services 
(and their potential sub -segments) can be left open  along the lines described 
above since no serious doubts as to the compatibility of the Transaction with the 
internal market  arise under any plausible geographic market definition .  
4.2.2.  Insurance distribution  
(27) The Commission  has previously  recognised  the national  nature  of insurance  
distribution channels. 21 It however ultimately left the exact definition open with 
respect to the question in particular as to whether the relevant geographic market 
could be wider than national.   
(28) The Notifying  Party  does not propose  any alternative  geographic  market  
definition.   
(29) For the purpose  of this Decision,  the exact  geographic  market definition (national 
or wider) for insurance distribution can be left open along the lines described 
above as the Transaction  does not raise  serious  doubts  under  any alternative  
market  definition.   
5. COMPETITIVE ASSESSMEN T 
5.1. Horizontal assessment  
(30) Based on the above market definitions, the overlaps between the Parties' activities 
rise to horizontally affected markets only in the UK in the following 
markets/segments: (i) LA, (ii) propert y LA, (iii) personal property LA, (iv) 
commercial property LA, (v) subsidence LA.  
  
                                                 
21  See M.8617 – Allianz/LV General Insurance Businesses , M.6957 – IF P&C/Topdanmark  and M.6053 
– CVC/Apollo/Brit Insurance . 

 
 
8 will remain sufficient alternative sources of supply in the UK market for LA 
services and its potential sub -segments post -Transaction. 25  
(34) More specifically , regarding the subsidence LA segment, although the 
competitive landsc ape appears from the above table rather consolidated, with only 
one competitor having a sizeable market share (i.e. Crawford ), several players 
have been identified as credible alternative suppliers, including Crawford, but 
also McLarens, Davis, Questgate, Woodgate, Maule, etc. 26 
(35) This is notably due to the fact that players with limited operations in a specific 
market segment , such as subsidence LA , can easily expand their activities in the 
said segment27  and, thus, exert a meaningful competitive constraint on the 
market.  
(36) The market investigation identified t he main barrier to expan sion in a given 
segment in  the need to recruit additional staff and experts .28 In this respect,  the 
Commission found that the UK labo ur legislation  enhances the ability of small 
LA players to quickly scale -up their capacity to meet customer demand , for 
example when concluding a large contract with a new customer . In particular, the 
TUPE Regulations29 provide that , when a customer switches to a new service 
provi der (or decides to bring the services back in -house ), the relevant employees 
working on the concerned  service may be transfer red with the services to become 
employed by the new service provider.   
(37) The Parties provided several example s of such transfers of employees  under the 
TUPE Regulations . For instance, in 2011, RBS Insurance decided to outsource its 
subsidence claims, which resulted in the transfer  to Innovation Group  of 25-30 
people that had been previous ly doing LA subsidence in -house at RBS . Similarl y 
in 2016, 113 employees were transferred from […] to Sedgwick, following […] 
decision to outsource its entire property and casualty claims and in 2018, 16 
employees have been transferred back from Sedgwick to […]  as a result of […] 
decision to partially b ring the services back in -house.  A competitor also 
specifically referred to a case of TUPE transfer of employees in the subsidence 
LA segment .30 
(38) Third, the market investigation confirmed  to a large extent  the Notifying Party's 
claim that Sedgwick and Innova tion Group are not close competitors . Sedgwick is 
a large, multi -risk integrated LA provider, with a broad LA practice covering 
property  but also  agriculture, casualty, personal motor and travel , whereas 
Innovation Group  is a specialised player focuss ing primarily on the subsidence 
risk (which accounts for more than [80-100%]  of its LA business ). According to 
most market participants,  in all the affected markets/segments , including 
subsidence LA, Sedgwick 's closest competitor  is Crawford, another multi -risk LA 
                                                 
25  See r eplies to question 23 of questionnaire Q1 to customers.   
26  See r eplies to question 10 of questionnaire Q2  to competitors and replies to questions 4 and 16 of 
questionnaire Q1 to customers . 
27  See r eplies to questions 4 and 5 of ques tionnaire Q2  to competitors.  
28  See r eplies to questions 4 and 5 of questionnaire Q2  to competitors.  
29  Transfer of Undertakings (Protection of Employment) Regulations 2006 as amended by the Collective 
Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 
2014 (“ TUPE ”). 
30  See r eplies to question 6.1 of questionnaire Q2  to competitors.  
 
 
9 provider . Regarding Innovation Group, the results are more mixed , with both 
Sedgwick and Crawford being mentioned as close competitors to Innovation 
Group .31 
(39) Fourth , LA services are mainly provided to large insurance companies , which are 
sophisticated customers with significant countervailing buyer power  and the 
possibility to discipline attempts to increase price s. The Commission found that 
the customer -base is rather consolidated, with a limited number of large 
customers representing a high proportion  of the UK demand for LA services. 32 
These large insurance companies generally award LA services in two ways : either  
(i) they organise a tender or request for quotes to build a panel of approved LA 
providers,33 or (ii) they directly nominate a LA provider .34  
(40) The market investigation confirmed the Parties ' claim that the membership to a 
panel does not provide a guarantee of work. Customers can decide on the 
allocation of work among panel members and can even decide to work with LA 
service provider s outside of the panel ,35 creating thus additional competition for 
the panel members.  The market investigation also revealed that prices differ 
between panel members and can evolve over time (both decrease and increase, 
depending on who initiates the negotia tion and whether additional services are 
provided by the LA provider) .36 It follows that LA providers compete not only for 
(i) a position on the panel but also for (ii) the allocation of work within the panel . 
This enables customers to push down prices when  the panel membership is 
negotiated but also afterwards by reallocating work among panel members or by 
using external LA providers.  These competitive dynamics tend to confirm that the 
Parties' ability to raise prices post -Transaction would be rather limite d. 
(41) The Commission also not es that customers  indicated that the size of loss adjusters 
is irrelevant to become a panel member if the LA has the necessary expertise 
sought by the insurer.37 This corroborates the Parties’ statement that even small 
LA providers  exert competitive pressure on the Parties.  
(42) Fifth , the market investigation confirmed th e Parties' claims that  customers can 
easily and swiftly switch LA providers  due to (i) the use of panels of service 
providers , which allows customers to easily re-allocate panel work and/or add 
additional providers , and (ii) the transfer of relevant employees under the UK ’s 
TUPE Regulations  (see above paragraphs 35 -36 and 38 -40). Therefore, customers 
have a large degree of freedom to decide which company they wan t to appoint for 
specific LA claims.  
                                                 
31  See r eplies to question 12 of questionnaire Q2 to competitors and question 18 to questionnaire Q1 to 
customers.  
32  See r eplies to question 17 of questionnaire Q2 to competitors.  
33  As previously explained, a panel is a business arrangement whereby a customer, generally an insurer, 
enters into contracts with a fixed number of suppliers to perform certain LA work that it has decided to  
outsource to third party service providers (see M.8764 – Sedgwick/Cunningham Lindsey , para. 30).  
34  See r eplies to question19 of questionnaire Q2 to competitors and questions 6 and 10 of questionnaire 
Q1 to custome rs. 
35  See replies to questions 26 of que stionnaire Q2 to competitors and question s 14 and 15 of 
questionnaire Q1 to customers.  
36  See replies to questions 23 to 25 of questionnaire Q2 to competitors and question 15 of questionnaire 
Q1 to customers.  
37  See replies to questions 11 and 12 of questi onnaire Q1 to customers.  
 
 
10 (43) Finally , the Commission notes that most customers and competitors consider that  
the Transaction will have a limited or no impact on the UK LA markets and its 
potential sub -segments.  For instance, some c ustomer s indicat ed that the 
Transaction is unlikely to have any adverse effects on competition since there are 
"enough providers " on the market  and "the parties’ activities appear 
complementary ".38 
(44) Based on the above considerations, the  Commission concludes that the 
Transa ction does not raise serious doubts as to its compatibility with the internal 
market regarding the provision of LA services (and potential sub -segments) in the 
UK. 
5.2. Vertical relationships  
(45) As previously indicated, PIB (a Carlyle portfolio company) is an insurance broker 
operating mostly in the UK, but also in Ireland through its subsidiary Citynet .  
(46) The Notifying Party claims that there is no direct vertical relationship between  the 
provision of TPA and LA services by Sedgwick (upstream) and the provision  of 
insurance brokerage by PIB (downstream). It is argued that PIB is a mere 
intermedia ry between insur ers and TPA / LA providers  and that insurers have the 
ultimate control over which TPA /LA providers they do business with.  However, 
the Parties also acknow ledged that , in some cases, in Ireland, PIB may 
recommend TPA /LA suppliers to insurers and may also appoint them on behalf of 
the insurers (subject to the insurer's prior authorisation).39 Therefore, the 
Commission considers that a direct vertical relations hip between the Target and 
PIB cannot be excluded.40 
(47) The above vertical relationship gives rise to affected markets since Sedgwick's 
market shares exceed 30%  in some upstream TPA and LA markets/segments in 
Ireland  and in the UK . However, in the d ownstream  insurance distribution 
market s (and potential sub -segments) , PIB's market share s are negligible , i.e. 
below [0-5]%, under any plausible market definition, both in the UK and Ireland.   
(48) In light of PIB's de minimis  share in the downstream market s/segments , the 
Commission considers that the Transaction does not raise any risk s of input or 
customer foreclosure. First, the implementation of an input foreclosure strategy , 
where the Target would only offer its services to insurance companies that buy 
PIB’s broker  services , excluding thus [90-100]%  of Sedgwick's  potential 
customers , would not be profitable and would be unrealistic . Second, the demand 
that could be potentially be foreclosed is marginal .  
(49) In view of the foregoing , the Commission concludes that the no tified 
concentration does not raise serious doubts as to its compatibility with the internal 
market in relation to the vertical link between the provision of TPA and LA 
                                                 
38  See r eplies to questions 27 to 29 of questionnaire Q2  to competitors and replies to question 22 to 24 of 
questionnaire Q1 to customers . 
39  See Form CO, para. 287.  
40  The Parties indicated in the UK, PIB  does not provide similar recommendations, or appoint TPA or 
LA suppliers on behalf of its customers  (see Form CO, footnote 127) . Therefore, a direct vertical 
relationship between the Target and PIB is more hypothetical . 
 
 
11 services (upstream) and the insurance distribution (downstream ) in Ireland and in 
the U K. 
6. CONCLUSION  
(50) For the above reasons, the European Commission has decided not to oppose the 
notified operation and to declare it compatible with the internal  market and with 
the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of 
the Merger Regulation and Article 57 of the EEA Agreement . 
For the Commission  
 
 
(Signed)  
Margrethe VESTAGER  
Member of the Commission