CELEX: 31995M0520
Language: en
Date: 1995-01-12 00:00:00
Title: COMMISSION DECISION of 12/01/1995 declaring a concentration to be compatible with the common market (Case No IV/M.520 - Direct Line / Bankinter) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31995M0520

COMMISSION DECISION of 12/01/1995 declaring a concentration to be compatible with the common market (Case No IV/M.520 - Direct Line / Bankinter) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 134 , 01/06/1995 P. 0005

 COMMISSION  DECISION of 12/01/1995 declaring a concentration to be compatible with the common market (Case No IV/M.520  - Direct  Line  /  Bankinter) according to Council  Regulation (EEC) No 4064/89  (Only the English text is authentic).  The  paper version of the decision is available through  the sales offices of the Office of Official Publications of  the European Communities PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(b) DECISION Registered with advice of delivery TO THE NOTIFYING PARTIES Dear Sirs, Subject:<tab> Case No.IV/M.520 DIRECT LINE/BANKINTER. <tab>  <tab> Notification of 2.12.1994 pursuant  to  Council Regulation (EC) No. 4064/89  1.<ind>  The  above  mentioned  notification  concerns   the agreement  signed on 24th November 1994 between Direct  Line Group Limited (Direct Line), a whollyowned subsidiary of The Royal  Bank  of  Scotland, and Bankinter, S.A.   (Bankinter) whereby  the  parties  acquire joint  control  of  Bankinter Aseguradora Directa, S.A., Compañía de Seguros y  Reaseguros (Bankinter Direct), a newly established insurance company.  2.<ind>   After   examination  of  the   notification,   the Commission  has concluded that the notified operation  falls within  the  scope of application of Council  Regulation  No 4064/89  and   does  not  raise serious  doubts  as  to  its compatibility   with  the  common  market   and   with   the functioning of the EEA Agreement.  I.<ind> THE PARTIES AND THE OPERATION 3.<ind> Direct Line is a whollyowned subsidiary of The Royal Bank  of  Scotland. It concentrates its activities on  motor and  household insurance marketed by direct telephone  sales in  the  UK.  Other  minor activities of the  group  include personal loans and mortgages and, in the near future, income protection products and term assurance. 4.<ind>  Bankinter  is  a  medium size  independent  Spanish banking  group  active in commercial and investment  banking and  related  activities. It also offers life insurance  and insurance bokerage to a very limited extent. 5.<ind>  Bankinter  Direct will be a joint  venture  vehicle which  will offer motor and household insurance policies  in Spain  and,  subsequently, in Portugal, by direct  telephone sales. It is currently a whollyowned subsidiary of Bankinter and  does  not yet carry out any business. At completion  of the  transaction Direct Linewill acquire a 50% share holding in Bankinter Direct by acquisition of shares from Bankinter. Further  to  the joint venture agreement, Direct  Line  will grant   exclusive  licences  and  technology.   A   services agreement  is  to be signed whereby Bankinter  will  provide technical and administrative sevices to Bankinter Direct. II.<ind> CONCENTRATION  6.<ind> Bankinter Direct will be a jointly controlled  joint venture performing, on a lasting basis, all of the functions of  an autonomous economic entity. Direct Line and Bankinter will each hold 50 % of the shares and equal voting rights in Bankinter  Direct.   The  board of  Bankinter  Direct  shall consist  of eight members, four appointed by each  party.  A number of matters will require the unanimous approval of the board  of  Bankinter  Direct, including business  plans  and business  expansion  into  Portugal,  expansion  into  other insurance segments, acquisitions and disposals above certain thresholds. 7.<ind>  The  joint  venture  will  not  give  rise  to  the coordination  of  competitive behaviour of Direct  Line  and Bankinter,  since  those companies are  neither  actual  nor potential  competitors.  There is  no  overlap  between  the parties'  business.  They are active in  different  markets, Direct  Line in motor and household insurance in  the  U.K., Bankinter in banking and life insurance in Spain (see  below on  relevent  product and geographic markets section  IV.A). The  joint  venture, Bankinter Direct, will be active  on  a separate  geographic market (Spain) from Direct  Line  (UK), and  in a separate product market from Bankinter. As regards the  banking  activities of The Royal Bank of  Scotland  and Bankinter,   the    risk  of  coordination  of   competitive behaviour   is  to  be  considered negligeable  since  their activities are carried out on separate geographical markets. The notified operation therefore constitutes a concentration within the meaning of Article 3(1)b of the Regulation. III.<ind> COMMUNITY DIMENSION 8.<ind> The undertakings concerned have a combined aggregate worldwide  turnover  in excess of 5.000  million  ECU.  Both Royal  Bank  of  Scotland and Bankinter have a Communitywide turnover  in  excess of 250 million ECU but do  not  achieve more   than   twothirds  of  their  aggregate  Communitywide turnover  within one and the same Member State. The notified operation therefore has a Community dimension. IV.<ind> COMPATIBILITY WITH THE COMMON MARKET A.<ind> THE RELEVANT PRODUCT AND GEOGRAPHICAL MARKET 9.<ind>  The operation concerns the marketing of  motor  and household  insurance policies in the Spain and  Portugal  by direct telephone sales. In previous decisions the Commission has  distinguished between life insurance, general insurance and  reinsurance. Reinsurance constitutes a separate  market because  of its purpose of spreading risk between  insurers. 10.<ind>  Life  and  general insurance, such  as  motor  and household  insurance, can be divided into  as  many  product markets as there are insurances covering different kinds  of risk.  Their  characteristics,  premiums  and  purposes  are distinct and there is typically no substitutability for  the consumer between the different risks insured.  11.<ind>  Although insurance markets are becoming more  open to  intracommunity competition as a result  of  current  and future   measures   to   facilitate   crossborder   selling, geographical  markets seem at present to be mainly  national in  view of the established market structures, the need  for adequate distribution channels, fiscal constraints  in  some cases   and   differing  national  systems   of   regulatory supervision.  However,  the  exact  product  and  geographic market  definitions  may  be  left  open  since,  even   the narrowest definition, the proposed operation does not   pose competition problems (see below, section IV.B.) B.<ind> COMPETITIVE ASSESSMENT 12.<ind> The operation will not create any  overlap  in  the nonlife  insurance sector in which the joint venture intends to  operate.  The  new type of distribution channel,  direct sales  by  telephone, has made  Direct  Line   UK's  biggest private car insurer with a market share of approximately 10% by  value. Further Direct Line has won approximately  2%  of the  household insurance segment. This position will not  be changed by the present operation since the Bankinter  Direct is not going to be present in the UK. 13.<ind>   The   transaction  will  not   adversely   affect competition  in the segments of car and household  insurance in  Spain  and  Portugal in which none  of  the  parties  is currently active. The markets are relatively fragmented  and the  new  entity  will remain exposed to  thecompetition  of other strong  well established operators.  14.<ind>  Given the degree of existing competition  and  the low  barriers to entry to this business, the new entity will not create or strengthen a dominant position as a result  of which effective competition will be significantly impeded in the common market or in a substantial part of it. V.<ind> ANCILLARY RESTRAINTS 15.<ind>  The notifying parties have requested that  certain restrictions   be   considered   as   ancillary    to    the concentration: <tab>  <tab> (i)<ind> The area of the operation of the joint venture will be restricted to Spain and Portugal.  The joint venture  is prevented from using Direct Line's licences  and technology [deleted  business secret]. <ind> <ind> (ii)<ind> The parties agree not to compete or to enter  into any other venture which conflicts with  [deleted business secret]. <ind>  <ind> (iii)<ind> Bankinter is prevented from  seeking to  register  any trade mark or other intellectual  property right  that is the same or substantially similar to  certain intellectual  property rights licensed under the  technology and trade mark licences. <ind>  Insofar  as these clauses are restrictive,  they  are necessary   and   directly  related    to   the   successful implementation of the concentration. They can  therefore  be treated as ancillary to the concentration.  16.<ind>  Direct Line is prevented from making  its  systems and  other expertise in the fields of [business secret   not exceeding  5  years].   This restriction  is  necessary  and directly related to the initial setting up of the 'Bankinter Direct'  joint  venture  and can  therefore  be  treated  as ancillary  to  the  concentration for a period  of  [deleted business secret] years from its inception. 17.<ind> [deleted  business secret] VI.<ind> CONCLUSION 18.<ind>    For   the   foregoing   reasons   the   proposed concentration  does  not  raise serious  doubts  as  to  its compatibility   with  the  common  market   and   with   the functioning of the EEA Agreement.  <ind> For the above reasons, the Commission has decided  not to   oppose  the  notified  operation  and  to  declare   it compatible  with the common market and with the  functioning of   the  EEA  agreement.   This  decision  is  adopted   in application  of  Article  6(1)b  of  Council  Regulation  No 4064/89 and article 57 of the EEA Agreement. For the Commission