CELEX: 32018M9056
Language: en
Date: 2018-12-10 00:00:00
Title: Commission Decision of 10/12/2018 declaring a concentration to be compatible with the common market (Case No COMP/M.9056 - Generali CEE Holding B.V. / Adriatic Slovenica, Zavarovalna družba, d.d.) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                               Brussels, 10.12.2018
                                                               C(2018) 8643 final
  In the published version of this decision,
  some information has been omitted pursuant                            PUBLIC VERSION
  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  has been replaced by ranges of figures or a                  To the notifying party:
  general description.
Subject:            Case M.9056 – Generali CEE / AS
                    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 5 November 2018, the European Commission received a notification of a
          proposed concentration pursuant to Article 4 of Council Regulation (EC) No
          139/2004 by which Assicurazioni Generali S.p.A. ("Generali", Italy) acquires sole
          control, through its wholly-owned subsidiary Generali CEE Holding B.V
          ("Generali CEE", the Netherlands), over Adriatic Slovenica, Zavarovalna družba,
          d.d. ("AS", Slovenia) by way of purchase of shares.
1.        THE PARTIES
(2)       Generali is the parent company of an international group of companies active in
          the insurance and financial sector worldwide. Generali primarily operates in Italy,
          Germany, France, Austria, and Spain. Through its subsidiary Generali CEE, it
          provides life and non-life insurance, as well as related financial services in the
          Central and Eastern European region.
(3)       AS is active in the life and non-life insurance as well as asset management
          services in Slovenia and Croatia. Outside the EEA, AS is active in the provision
          of asset management services in Macedonia.
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').
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-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak--- (4)     Generali is hereinafter referred to as the "Notifying Party". Generali and AS are
        collectively referred to as the "Parties".
2.      THE CONCENTRATION
(5)     The Parties entered into a Share and Purchase Agreement on 23 May 2018,
        pursuant to which Generali will acquire, indirectly through Generali CEE, sole
        control over AS by the purchase of 100% of its shares (the "Transaction").
(6)     The Transaction therefore constitutes a concentration within the meaning of
        Article 3(1)(b) of the Merger Regulation.
3.      EU DIMENSION
(7)     The undertakings concerned have a combined aggregate world-wide turnover of
        more than EUR 5 000 million3 (Generali: EUR 68 537 million; AS: EUR […]).
        Each of them has an EU-wide turnover in excess of EUR 250 million (Generali:
        EUR […]; AS: EUR […]), but they do not achieve more than two-thirds of their
        aggregate EU-wide turnover within one and the same Member State.
(8)     The notified operation therefore has an EU dimension pursuant to Article 1(2) of
        the Merger Regulation.
4.      COMPETITIVE ASSESSMENT
(9)     The Parties have overlapping activities in the life and non-life insurance markets
        in Slovenia and in Croatia. The Transaction however only gives rise to
        horizontally affected markets in relation to the provision of non-life insurance
        products in Slovenia.4
4.1.    Relevant markets
4.1.1. Relevant product market
(10)    In previous decisions,5 the Commission considered that three broad categories of
        insurance products could be distinguished: life insurance, non-life insurance and
        re-insurance.
(11)    With respect to non-life insurance, the Commission considered the possibility that
        non-life insurance could be divided into as many different product markets as
3     Turnover calculated in accordance with Article 5 of the Merger Regulation and the Commission Consolidated Jurisdictional
      Notice (OJ C 95, 16.4.2008, p. 1).
4     The Transaction does not give rise to vertically affected markets.
5    COMP/M.5384, BNP Paribas/Fortis; COMP/M.6957, IF P&C/TopDanmark; COMP/M.5083, Groupama/OTP
     Garancia; COMP/M.5031, ACE/CICA; COMP/M.4808, CVC/Charterhouse/PHL/AA/Saga; COMP/M 4284,
     Axa/Winterthur; COMP/M.4701, Generali/PPF Insurance Business and COMP/M.4047, Aviva/Arik Life.
                                                                     2
 ---pagebreak---         there are types of risks to insure.6 More specifically, the Commission
        distinguished the following non-life insurance segments: (i) accident and
        sickness, (ii) motor vehicle, (iii) property, (iv) liability, (v) marine, aviation and
        transport ("MAT"), (vi) credit and suretyship and (vii) travel insurance. This
        possible segmentation is based on the fact that the characteristics and purpose of
        the different types of insurance are distinct, and that there is typically no
        substitutability between different types of insurance from a customer’s
        perspective. However, the Commission also noted that there were indications of
        potential degree of supply-side substitutability between some insurance products.
(12)    In addition to the above, in its past decisional practice, the Commission
        considered several alternative segmentations of the non-life insurance market. In
        particular, the Commission envisaged to further segment the market based on the
        applicable national insurance classification.7 In certain decisions, the Commission
        also distinguished fire insurance8 or legal assistance9. A further distinction could
        also be made between individual and group customers.10
(13)    The Commission ultimately left open the precise product market definition for
        non-life insurance products.
(14)    The Notifying Party agrees with the previous assessment of the Commission and
        provided market share data on the basis of all plausible market definitions,
        including the regulatory classes determined by the Slovenian Insurance Act.11
(15)    The Commission considers that there is no reason to depart from the past
        decisional practice and that the product market definition for non-life insurance in
        Slovenia can be left open for the purpose of the present case since no competition
        concerns arise under any plausible product market definition.
4.1.2. Relevant geographic market
(16)    In previous decisions,12 the Commission considered that the relevant market for
        non-insurance products and its sub-segments is likely to be national in scope with
        the exception of certain insurance risks, including MAT insurance and generally
        large risk insurance, which the Commission considered to be wider than national
        in scope.
6    COMP/M.5384, BNP Paribas/Fortis, COMP/M.4284, AXA/Winterthur and COMP/M.7478, Aviva/Friends
     Life/Tenet; COMP/M.6521, Talanx International/Meiji Yasuda Life Insurance/Warta; COMP/M.4701
     Generali/PPF Insurance Business.
7    COMP/M.1712, Generali / INA; and COMP/M.6649, Allianz / Insurance Portfolio and Brokerage Services of
     Gan Eurocourtage.
8    COMP/M.4844, Fortis/ABN Amro Assets.
9    COMP/M.7233, Allianz/Going concern of Unipolsai Assicurazioni.
10   COMP/M.8257, NN Group / Delta Lloyd.
11   Accident insurance (class 1), health insurance (class 2), land motor vehicle insurance, other than rolling stock
     (class 3), (railway rolling stock insurance (class 4), aircraft insurance (class 5), ship insurance (class 6), goods in
     transit insurance (class 7), fire and natural forces insurance (class 8), other damage to property insurance (class
     9), motor vehicle liability insurance (class 10), aircraft liability insurance (class 11), ship liability insurance
     (class 12), general liability insurance (class 13), credit insurance (class 14), suretyship insurance (class 15),
     miscellaneous financial loss insurance (class 16), legal expenses insurance (class 17), and tourist/travel
     assistance insurance (class 18).
12   COMP/M.5010, Berkshire Hathaway/Munich Re/GAUM; COMP/M.6217, Bâloise Holding/Nateus/Nateus Life.
                                                                 3
 ---pagebreak---  ---pagebreak--- (21)    First, in the affected markets/segments, the Parties' combined market shares
        would remain moderate (below [20-30]%) and/or the increment brought about by
        Generali would be minimal (not exceeding [0-5]%).
(22)    In all cases, post-Transaction, the Parties will continue to face several significant
        competitors.
(23)    More specifically, on the overall market segment for the provision of non-life
        insurance products, the Parties would hold a combined market share of [20-30]%
        in 2017, with a limited increment brought about by Generali ([0-5]%). Post-
        transaction, the new entity would become the second-largest insurance provider in
        Slovenia, well behind the market leader, Triglav ([30-40]%). Furthermore, the
        new entity would be constrained by other major insurers with similar market
        shares, i.e. Vzajemna ([10-20]%) and Sava ([10-20]%), as well as a number of
        other smaller competitors (e.g. Grawe, SID, Allianz,Wiener, Ergo and Merkur).
        The vast majority of customers who responded to the market investigation
        confirmed that, post-Transaction, the number of alternative suppliers would
        remain sufficient on the overall non-life insurance market segment to prevent any
        potential anti-competitive effects potentially stemming from the Transaction.14
(24)    As regards the potential sub-segments of non-life insurance, post-Transaction, to
        the exception of two MAT sub-segments (i.e. ship and liability for vessels
        insurance), the Parties would have moderate combined market shares (never
        exceeding [20-30]%) and would remain the third largest insurance provider in
        Slovenia. In each of these sub-segments, the new entity would face several
        competitors, including the market leaders, Triglav and Sava, as well as smaller
        players, some of which being specialised in specific types of non-life insurance
        (e.g. Ergo who recently entered the travel insurance market in Slovenia). This was
        confirmed by the vast majority of customers who responded to the market
        investigation.15
(25)    On the two MAT sub-segments on which the Parties hold a combined market
        share [of 40-50]% (i.e. ship and liability for vessels insurance), the increment
        brought about by Generali would be negligible and would in any event not exceed
        [0-5]%. On these two hypothetical segments, the Transaction would therefore
        only result in the elimination of a competitor which is at best marginal and would
        consequently leave the structure of the market essentially unchanged. Moreover,
        the possibility that these MAT sub-segments might in part be wider than national
        in scope further acts to attenuate any possible competition concerns since AS'
        market share would only be diluted. Moreover, most customers consider that,
        post-Transaction, the number of alternative suppliers would remain sufficient
14   See responses to question 10 of Q2 – questionnaire to customers. For instance, one customer noted
     that "Main competitors should still remain strong enough to keep pressure on the prices. Also
     smaller insurers which are branch offices of large global insurance companies (VIG, Allianz, Ergo)
     will be competing on most insurance lines" (response to question 11.1 of Q2 – questionnaire to
     customers).
15   See responses to questions 17 (accident and sickness), 24 (motor vehicles), 38 (property), and 45
     (travel) of Q2 – questionnaire to customers.
                                                       5
 ---pagebreak---         with respect to the market segment for the supply of MAT insurance and its
        potential sub-segments.16
(26)    Second, the market investigation largely confirmed the Notifying Party's
        submission that customers would face no major difficulties to switch to other
        insurance providers in Slovenia. Indeed, the results of the market investigation
        revealed that customers have the ability to select alternative insurance providers
        and that switching is relatively easy in all market segments of the non-life
        insurance market.17 Customers may change insurance providers at no additional
        cost not only at the end of the contract, but also before that date, generally upon a
        reasonable notice period. If insurance contracts are concluded for a longer period,
        they can also be terminated upon notice before their term at no (or reasonable)
        cost. Therefore, since there are no meaningful capacity constraints on the supply-
        side, customers can easily switch to a different insurance company in response to
        increased premiums or reduced services by their existing insurer.
(27)    Third, the market investigation also confirmed the Parties' claim that there are no
        significant barriers to entry into the non-life insurance market segment in
        Slovenia (and its potential sub-segments). The only regulatory requirement for an
        undertaking to provide non-life insurance of a particular kind in Slovenia is to
        submit a notification (for undertaking based in the EU) or obtain an authorisation
        (for undertaking not based in the EU) form the regulator, the Insurance
        Supervision Agency. The market investigation revealed that one provider of non-
        life insurance, with currently no operations in Slovenia, is planning to enter the
        Slovenian market within the next 2 years.
(28)    Finally, the market investigation revealed no substantiated competition concerns
        from customers or competitors in connection with either an overall market
        segment for non-life insurance or any of its possible sub-segments in Slovenia.18
(29)    In view of the above, the Commission concludes that the Transaction does not
        raise serious doubts as to its compatibility with the internal market in the
        Slovenian market segment for the supply of non-life insurance and any of its
        potential sub-segments.
16   See responses to question 31 of Q2 – questionnaire to customers.
17   See responses to questions 9 (non-life), 16 (accident and sickness), 23 (motor vehicles), 30 (MAT),
     37 (property), and 44 (travel) of Q2 – questionnaire to customers.
18   See responses to questions 7 (non-life), 11 (accident and sickness), 15 (motor vehicles), 19 (MAT),
     23 (property), 26 (travel), and 27 to 99 of Q1 – questionnaire to competitors and (i) questions 11
     (non-life), 18 (accident and sickness), 25 (motor vehicles), 32 (MAT), 33 (property), 46 (travel), and
     47 to 49 of Q2 – questionnaire to customers. For instance, one customer noted that "finally (they) will
     have another A rate insurance company with good product portfolio" (see response to question 47.1
     of Q2 – questionnaire to customers).
                                                        6
 ---pagebreak--- 5.   CONCLUSION
(30) 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
                                             7