ESSENCE OF WHICH MAY BE SUMMARIZED AS FOLLOWS . THERE IS NO TRADE BETWEEN THE MEMBER STATES BECAUSE INSURANCE SERVICES ARE NOT PROVIDED ACROSS FRONTIERS, SINCE THE CONCLUSION OF SUCH CONTRACTS WAS MADE IMPOSSIBLE BY GERMAN LEGISLATION WHICH LAYS DOWN THE REQUIREMENT THAT FOREIGN INSURANCE COMPANIES MUST BE ESTABLISHED IN THE FEDERAL REPUBLIC . THE BRANCHES OF FOREIGN INSURANCE COMPANIES CANNOT BE REGARDED, AS WAS STATED IN THE DECISION, AS AN "EXTENDED ARM" OF THE PARENT COMPANY; ON THE CONTRARY, BRANCHES CONSTITUTE AUTONOMOUS ECONOMIC ENTITIES AND THEREFORE INDEPENDENT UNDERTAKINGS FROM THE POINT OF VIEW OF COMPETITION LAW . CONSEQUENTLY, THE RECOMMENDATION RELATES TO NATIONAL SITUATIONS ONLY . THE APPLICANT ADDS THAT, IN ANY EVENT, THE COMPETITIVE POSITION OF FOREIGN INSURERS WAS NOT ALTERED BY THE RECOMMENDATION; IT POINTS OUT THAT WITH REGARD TO CO-INSURANCE BUSINESS - THE SOLE AREA WHERE, ACCORDING TO GERMAN LAW, THE REQUIREMENT OF ESTABLISHMENT IS NOT APPLICABLE - THERE IS ABSOLUTELY NO FREEDOM OF ACTION SINCE, AS REGARDS PREMIUMS, CO-INSURERS FOLLOW THE LEADING INSURER IN THE CO-INSURANCE ARRANGEMENT .
47 THE COMMISSION' S DEFENCE GAVE RISE TO DETAILED DISCUSSION WITH REGARD TO THE CONCEPT OF A "BRANCH" AND ITS STATUS IN LAW, BUT THERE IS NO NEED FOR THE COURT TO GO INTO THESE MATTERS, AS IT CONSIDERS THAT THE TWO REASONS STATED IN THE CONTESTED DECISION ARE CORRECT AND THAT THEY JUSTIFY THE CONCLUSION THAT TRADE BETWEEN MEMBER STATES IS CAPABLE OF BEING AFFECTED BY THE RECOMMENDATION .
48 IN THE FIRST PLACE, THE REQUIREMENT THAT AN INSURANCE COMPANY WHICH HAS ITS HEAD OFFICE IN ANOTHER MEMBER STATE BUT WHICH SEEKS TO PURSUE ITS BUSINESS ON GERMAN TERRITORY MUST SET UP AN ESTABLISHMENT IN THAT TERRITORY DOES NOT HAVE THE EFFECT OF EXCLUDING THE EXISTENCE OF TRADE BETWEEN MEMBER STATES IN INSURANCE SERVICES . THE FACT THAT THE BRANCH ALONE IS AFFECTED BY THE RECOMMENDATION DOES NOT EXCLUDE THE POSSIBILITY THAT THE FINANCIAL RELATIONSHIP BETWEEN THE BRANCH AND THE PARENT COMPANY MIGHT BE AFFECTED BY THAT FACT; AND THAT IS SO REGARDLESS OF THE DEGREE OF LEGAL INDEPENDENCE OF THE BRANCH .
49 IN THAT REGARD IT MUST BE RECOGNIZED THAT WHEN THE COMMISSION ADOPTED ITS DECISION GERMAN LEGISLATION WAS VERY RESTRICTIVE WITH REGARD TO THE CONDUCT OF INSURANCE BUSINESS IN THE FEDERAL REPUBLIC OF GERMANY BY INSURANCE COMPANIES WHOSE HEAD OFFICE WAS IN ANOTHER MEMBER STATE . NEVERTHELESS, SUCH COMPANIES COULD TAKE PART IN INSURANCE BUSINESS IN THE FEDERAL REPUBLIC OF GERMANY IF THEY ESTABLISHED A BRANCH IN THAT COUNTRY OR IF THEY PARTICIPATED IN CO-INSURANCE FOR COVERING A RISK SITUATED THERE . ALTHOUGH THE PROVISIONS OF GERMAN LAW PERMIT CERTAIN ACTIVITIES AFFECTING TRADE BETWEEN MEMBER STATES, THEY CANNOT BE RELIED UPON IN ORDER TO FRUSTRATE THE APPLICATION OF ARTICLE 85 ( 1 ) TO RESTRICTIONS ON COMPETITION RELATING TO THOSE VERY ACTIVITIES .
50 SECONDLY, AN ACROSS-THE-BOARD INCREASE IN PREMIUMS WHICH IS NOT JUSTIFIED BY THE INDIVIDUAL POSITION OF THE UNDERTAKINGS CONCERNED IS CAPABLE OF AFFECTING THE POSITION OF FOREIGN INSURERS WHO ARE