CELEX: 31993M0344
Language: en
Date: 1993-05-28 00:00:00
Title: COMMISSION DECISION of 03.08.1993 declaring a concentration to be compatible with the common market (Case No IV/M.344 - CODAN / HAFNIA) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31993M0344

COMMISSION DECISION of 03.08.1993 declaring a concentration to be compatible with the common market (Case No IV/M.344 - CODAN / HAFNIA) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 225 , 20/08/1993 P. 0000

 COMMISSION DECISION of 28.05.1993 declaring a concentration to  be compatible with the common market (Case No IV/M.344 - CODAN  / HAFNIA) 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 party Dear Sirs, Re: <ind> Case Nº IV/M. 344 - Codan/Hafnia  <ind> Notification of 23.04.1993 pursuant to Council  regulation (EEC) Nº 4064/89  1. <ind> The above operation concerns the acquisition by  Forsikringsselskabet Codan A/S (CODAN) of all the shares in  Forsikringsselskabet Hafnia A/S and Hafnia Bank A/S with  subsidiaries (HAFNIA), previously wholly owned by Hafnia  Holding af 1992 A/S (Hafnia Holding).  2. <ind> After examination of the notified operation, the  Commission has concluded that it 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.  I. <ind> THE PARTIES  3. <ind> Hafnia Holding is the parent company of Hafnia. After  finalization of the notified operation Hafnia Holding will no  longer have any insurance or banking activities in Denmark. The  insurance businesses of Hafnia Holding in the UK and Sweden  (through Skandia) as well as its banking activities in  Switzerland are excluded from the proposed operation.  4. <ind> Hafnia is one of the largest insurance companies in  Denmark, with activities in all segments of the life and non- life insurance markets in Denmark. Hafnia is no longer active  on the market for reinsurance and its share of the Danish  banking market is negligible.  5. <ind> Codan is a Danish subsidiary of Sun Alliance Plc.,  which is a large UK general insurance company with underwriting  activities throughout the world. Codan is active on all major  segments of the Danish non-life and life insurance markets.   II. <ind> CONCENTRATION WITH A COMMUNITY DIMENSION  6. <ind> The acquisition by Codan of the entire share capital  of Hafnia constitutes a concentration within the meaning of  Art. 3(1)b of Regulation (EEC) Nº 4064/89, hereinafter referred  to as the Regulation. The enterprises concerned have a combined  aggregate worldwide turnover in excess of 5 000 million ECU.  Both Codan and Hafnia have a Community-wide turnover in excess  of 250 million ECU but do not achieve more than two-thirds of  their aggregate Community-wide turnover within one and the same  Member State. The notified operation therefore has a Community  dimension.  III. <ind> COMPATIBILITY WITH THE COMMON MARKET   <tab> A. <ind> The relevant product and geographic markets  7. <ind> It is suggested that there exist as many product  markets as there are insurances for different kinds of risk,  since their characteristics, premiums and purposes are quite  distinct from the consumers viewpoint. Consequently they are  not to any great extent substitutable for one another. Thus,  life insurance and each type of non-life insurance seem to  constitute separate product markets. Reinsurance constitutes  another market because of its purpose of spreading the risks  between insurers. The product markets affected by the operation  are within the life, and non-life, insurance sectors. Again,  although insurance markets may become more open to intra- Community competition in the foreseeable future, geographic  markets seem at present to be mostly national in view of  differences in distribution channels, consumer preferences and  public regulation. This seems to apply in particular to private  insurance. Following the operation the new entity would however  achieve market shares exceeding 25 per cent only in five  relatively minor segments of the Danish market for commercial  non-life insurance. The new entity would face competition from  other companies with equal or higher market shares in the seven  largest segments of the non-life market (including both private  and commercial insurances) as well as in the overall non-life  and life insurance markets.   <ind> A precise definition of the relevant market does not  have to be adopted since even on the narrowest possible market  definition the operation does not raise serious doubts about  its compatibility with the Common Market.    <tab> B. <ind> Competition assessment  8. <ind> Following the operation the new entity will hold about  one fifth (± 18%) of the Danish non-life insurance market and  even less (± 12%) of the life insurance market. Its major  competitor Baltica will hold a similar share of the overall  non-life market and higher shares of certain segments thereof.  Baltica will also hold higher shares of the life insurance  market. Some smaller companies will have equal or higher market  shares on certain segments of the market.  9. <ind> The second non-life insurance coordination Directive  (88/357/EEC) creates a common market throughout the Community  for so-called large risks. Large risks are defined to include,  inter alia marine and transport, aviation and credit and  guarantee. Insurance companies covering large risks in another  Member State do not therefore need to be authorized in that  Member State. As regards the classes of insurance mentioned  above the Directive is as of 01.01.1993 applicable in all  Member States and has been implemented in Denmark by Law No.  304 of 16.05.1990.  10. <ind> The new entity will have the highest market shares of  all companies active in some transport-related segments of the  market for commercial non-life insurance in Denmark (marine &  transport 39%, aviation 56% and "other commercial" 38%).  However in contrast to other segments of the insurance market,  the commercial non-life segments are open to international  competition. On a world or Community-wide market the combined  market share of the parties to the concentration would amount  to less than 5 %. The reasons for the more international  character of the market for transport insurance is apart from  the EC liberalization measures above, to be found in the nature  of the service to be insured, historical practice and  the very  close connection between this market and the market for  reinsurance, due to the large risks involved.   <ind> The customers of these kinds of insurance are relatively  large companies and often active in several countries. They  therefore have the possibility of placing their insurance  policies in the country most favorable to them and insurance  companies established in other Member States are able to make  offers to Danish companies without establishing themselves in  Denmark. The customers have stated that they could place their  insurance policies with other companies established outside of  Denmark.  11. <ind> The new entity will also have high market shares in  two niche segments of the Danish market for commercial non-life  insurance.   <ind> As regards one of those segments, personal disability  (54%) there is no overlap since Codan has not previously been  active in this segment.  <ind> On the Danish market there are important competitors  such as Baltica, Topdanmark and the large Swiss general  insurance company Zuerich, which although not very strong in the  Danish market at the moment, enjoys the financial power of a  world-wide insurance company. Thus, for the above reasons and  due to the EC measures applicable to the liberalization of the  insurance markets in the member states, it is likely that the  market behavior of the new entity will be controlled to an  appreciable extent by their competitors.   12. <ind> The other segment, credit and guarantee, is a highly  specialized market on which very few insurance companies have  chosen to participate despite the absence of any significant  barriers of entry. The new entity will have 33% market share,  which in itself is not indicative of market dominance. There is  one small insurance company in Denmark (Dansk Kaution) which is  specialized in this kind of insurance and which holds a  slightly higher market share than the combined new entity.    <ind> There are also two particular characteristics of the  Danish insurance market which might counterbalance the new  entity's market strengh. Firstly the contract periods in  general are limited to one year due, inter alia, to conditions  imposed by consumer organizations. Secondly there is currently  a trend in Denmark towards an increasing use of independent  brokers, who act on behalf of clients to obtain favorable  conditions from the insurance companies. The impact of  independent brokers can be expected to be strongest on the  markets covered by EC liberalization measures.  13. <ind> In conclusion  although there are some limited  horizontal overlaps between the activities of Codan and Hafnia  in the transport, and credit and guarantee segments in Denmark,  it is not expected that the concentration will create or  strenghthen a dominant position as a result of which effective  competition would be significantly impeded in the Common  market.   <ind> For the above reasons, the Commission has decided not to  oppose the notified concentration and to declare it compatible  with Common market. This decision is adopted in application of  Article 6(1)b of Council Regulation No. 4064/89.  For the Commission