CELEX: 32021M10102
Language: en
Date: 2021-08-12 00:00:00
Title: Commission Decision of 12/08/2021 declaring a concentration to be compatible with the common market (Case No COMP/M.10102 - VIG / AEGON CEE) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 12.08.2021
                                                                C(2021) 6077 final
                                                                                PUBLIC VERSION
                                                                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                                                                has been replaced by ranges of figures or a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.
                                                                Vienna Insurance Group AG
                                                                Wiener Versicherung Gruppe
                                                                Schottenring 30
                                                                1010 Vienna
                                                                Austria
Subject:             Case M.10102 – VIG/AEGON CEE
                     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 15 July 2021, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004,3 by
          which Vienna Insurance Group AG Wiener Versicherung Gruppe (‘VIG’ or the
          ‘Notifying Party’, Austria) acquires within the meaning of Article 3(1)(b) of the
          Merger Regulation sole control of AEGON Hungary Holding B.V., AEGON
          Hungary Holding II B.V., AEGON Poland/Romania Holding B.V., and AEGON
          Turkey Holding B.V. (collectively ‘AEGON CEE’ or the ‘Target’ and together with
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’).
3     OJ L 24, 29.1.2004, p. 1 (the ‘Merger Regulation’).
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---          VIG, the ‘Parties’)4 . The concentration is accomplished by way of purchase of shares
         (the ‘Transaction’).
1.       THE PARTIES
(2)      VIG is the holding company of Vienna Insurance Group, an international insurance
         group headquartered in Austria. It conducts its business through subsidiaries and
         branches in 30 countries, mainly in the Central and Eastern Europe region (‘CEE’).
         It offers life and non-life insurance services pursuing a multi-brand strategy based on
         established local brands, as well as local management.
(3)      AEGON CEE encompasses the Hungarian, Polish, Romanian and Turkish
         businesses of the AEGON Group of the Netherlands. It is active in the fields of life
         and non-life insurance, pension fund business, asset management and related
         ancillary services.
2.       THE OPERATION
(4)      The Transaction will be implemented pursuant to a Sale and Purchase Agreement
         (‘SPA’) signed by VIG and Aegon N.V. on 29 November 2020.
(5)      Pursuant to the SPA, VIG will acquire the entire issued share capital of the entities
         that together form AEGON CEE.
(6)      Therefore, VIG will have sole control over AEGON CEE.
3.       UNION DIMENSION
(7)      The notified operation has a Union dimension pursuant to Article 1(2) of the Merger
         Regulation, as (i) the undertakings concerned have a combined aggregate world-
         wide turnover of more than EUR 5 000 million (VIG: 10 429 million, AEGON CEE:
         […]), (ii) each of them has a EU-wide turnover in excess of EUR 250 million (VIG:
         […], AEGON CEE: […]) and (iii) not each of the undertakings concerned achieves
         more than two-thirds of its aggregate Union-wide turnover within one and the same
         Member State.
4.       PROCEDURE PURSUANT TO THE HUNGARIAN RULES ON FOREIGN DIRECT
         INVESTMENT
(8)      […]. On 6 April 2021, the Minister denied the application from VIG to proceed with
         the Transaction (the ‘Veto Decision’).5 […]. The Commission’s assessment of the
         competitive impact of the Transaction, as a concentration with a Union dimension,
         under the Merger Regulation, is without prejudice […] to the Veto Decision. It is
         also without prejudice to any assessment of the Veto Decision by Hungary under
         Article 21(4) of the Merger Regulation.
4   Publication in the Official Journal of the European Union No C 293, 23.7.2021, p. 6.
5   [Information on the procedure pursuant to Hungarian rules on foreign direct investment] .
                                                               2
 ---pagebreak--- 5.        COMPETITIVE ASSESSMENT
5.1.      Analytical framework
(9)       Under Articles 2(2) and 2(3) of the Merger Regulation, the Commission must assess
          whether a proposed concentration would significantly impede effective competition
          in the internal market or in a substantial part of it, in particular through the creation
          or strengthening of a dominant position.
(10)      A concentration can entail horizontal effects. In this respect, in addition to the
          creation or strengthening of a dominant position, the Commission Guidelines on the
          assessment of horizontal mergers under the Merger Regulation6 (“the Horizontal
          Merger Guidelines”) distinguish between two main ways in which mergers between
          actual or potential competitors on the same relevant market may significantly impede
          effective competition,7 namely (a) by eliminating important competitive constraints
          on one or more firms, which consequently would have increased market power,
          without resorting to coordinated behaviour (non-coordinated effects); and (b) by
          changing the nature of competition in such a way that firms that previously were not
          coordinating their behaviour are now significantly more likely to coordinate and
          raise prices or otherwise harm effective competition. A merger may also make
          coordination easier, more stable or more effective for firms, which were coordinating
          prior to the merger (coordinated effects). Concentrations which, by reason of the
          limited market share of the undertakings concerned are not liable to impede effective
          competition may be presumed to be compatible with the internal market. An
          indication to this effect exists, in particular, where the market share of the
          undertakings concerned does not exceed 25 % either in the internal market or in a
          substantial part of it.8
(11)      Furthermore, a concentration can entail vertical effects. The Commission Guidelines
          on the assessment of non-horizontal mergers under the Merger Regulation9 (the
          “Non- Horizontal Merger Guidelines”) also distinguish between two main ways in
          which non-horizontal mergers may significantly impede effective competition: (a)
          when they give rise to input and/or customer foreclosure (non-coordinated effects);
          and (b) when the merger changes the nature of competition in such a way that firms
          that previously were not coordinating their behaviour, are now more likely to
          coordinate to raise prices or otherwise harm effective competition (coordinated
          effects).10 The Non-Horizontal Merger Guidelines distinguish two types of
          foreclosure: (a) where the merger is likely to raise the costs of downstream rivals by
          restricting their access to an important input (input foreclosure) and (b) where the
          merger is likely to foreclose upstream rivals by restricting their access to a sufficient
          customer base (customer foreclosure)11 . According to the Non-Horizontal Merger
          Guidelines, the Commission is unlikely to find concern in non-horizontal mergers,
6    Commission Guidelines on the assessment of horizontal mergers under the Merger Regulation, OJ C 31, 5
     February 2004, paragraphs 5–18.
7    Ibid, paragraph 22.
8    Ibid, paragraph 18.
9    Commission Guidelines on the assessment of non-horizontal mergers under the Merger Regulation, OJ C
     265, 18 October 2008, paragraphs 6–25.
10 Ibid, paragraphs 17-19.
11 Ibid, paragraph 30.
                                                       3
 ---pagebreak---           where the market share post-merger of the new entity in each of the markets
          concerned is below 30%.12
5.2.      Activities of the Parties
(12)      The Transaction results in horizontal overlaps in the field of insurance products.
          More precisely, the Parties overlap in Hungary in the life and non-life insurance
          sectors and in Romania in the life insurance sector. In each of these, the Transaction
          gives rise to horizontally affected markets on certain plausible segmentations. These
          possible markets are assessed in Section 5.4.1.
(13)      The Transaction also results in horizontal overlaps in Poland in the life and the non-
          life insurance sectors. However, the Transaction does not give rise to any
          horizontally affected markets in Poland on any plausible market definition.
          Moreover, the market investigation did not give rise to any suggestion that the
          Transaction would raise serious doubts as to its compatibility with the internal
          market in any markets in Poland. Therefore, these markets will not be further
          assessed in this decision.13
(14)      The Transaction results in minor vertical relationships between the Parties' life and
          non-life insurance activities on the one hand and their limited activities in the fields
          of reinsurance, asset management and insurance distribution on the other hand.
          These vertical links are assessed in Section 5.4.2.
5.3.      Market definitions
5.3.1. Product market definitions
(15)      In previous decisions, the Commission distinguished between three broad categories
          of       insurance    products:      (i) life  insurance,      (ii) non-life     insurance and
                             14
          (iii) reinsurance. The Commission also considered the definition of a downstream
          market for insurance distribution,15 upstream markets for asset management16 and
          pensions' administration,17 and considered assistance services as distinct from the
          provision of non-life insurance products.18 The Transaction leads to horizontally
          affected markets in relation to life insurance and non-life insurance.
12   Ibid, paragraph 25.
13   Form CO, Sections 6.5 and 6.6. Replies to Q1 – eQuestionnaire to competitors, question 26 and Q2 –
     eQuestionnaire to customers, question 27.
14   Case M.9796 – Uniqa/Axa (Insurance, Asset Management and Pensions – Czechia, Poland and Slovakia),
     para. 7; Case M.9531 – Assicurazioni Generali/Seguradoras Unidas/AdvanceCare, para. 9; Case M.7478 –
     Aviva/Friends Life/Telenet, para. 23; Case M.6883 – Canada Life/Irish Life, para. 16.
15   Case M.9796 – Uniqa/Axa (Insurance, Asset Management and Pensions – Czechia, Poland and Slovakia),
     para. 7.
16   Case M.8257 – NN Group/Delta Lloyd, paras. 108-115; Case M.6812 SPFI/Dexia, paras. 30-33.
17   Case M.8257 – NN Group/Delta Lloyd, paras. 78-81.
18   Case M.9531 – Assicurazioni Generali/Seguradoras Unidas/AdvanceCare, para. 9.
                                                         4
 ---pagebreak--- 5.3.1.1. Life insurance
        (A)       Commission’s decisional practice
(16)    As regards the product market definition for life insurance products, from a demand-
        side perspective the Commission distinguished between the following product
        categories in its decisional practice: (i) pure risk protection products, (ii) pension
        products, and (iii) savings/investment products.19
(17)    In certain decisions, the Commission also distinguished between life insurance for
        individuals and for group customers. 20 Furthermore, a distinction between unit-
        linked (and index-linked) life insurance products on the one hand and non-unit-
        linked (and non-index-linked) life insurance products on the other hand was
        considered as well.21
(18)    In some cases, the Commission has considered additional segmentations of the life
        insurance sector, including based on national insurance classifications or between
        individual and group customers.22
(19)    However, from a supply-side perspective, the Commission has recognised that the
        conditions for the provision of life insurance covering different risk types are quite
        similar and most large insurance companies are active in several risk types, which
        suggests that many different types of life insurance could be included in the same
        relevant product market.23
(20)    The Commission has ultimately always left open the definition of the relevant
        product market for life insurance.
        (B)       Notifying Party’s submissions
(21)    The Notifying Party submits that the relevant product market would encompass all
        life insurance products (pure risk protection products, pension products and
        savings/investment products), as well as retail savings and investment products
        offered by other financial service providers on the basis that: (i) there is a high
        degree of supply-side substitutability between life insurance products of different
        types, and (ii) from a demand-side perspective, life insurance savings and investment
        products compete with other retail savings and investment products (such as
        investment funds, bonds, equities, savings accounts and deposits) offered by non-
        insurance companies. However, the Notifying Party considers that ultimately the
        precise definition of the relevant product markets with regard to life insurance
        products can be left open in the present case as the Transaction does not raise
19  Case M.9796 – Uniqa/Axa (Insurance, Asset Management and Pensions – Czechia, Poland and Slovakia),
    para. 8; Case M.7478 – Aviva/Friends Life/Telenet, para. 13 and further cases cited therein.
20  Case M.9796 – Uniqa/Axa (Insurance, Asset Management and Pensions – Czechia, Poland and Slovakia),
    para. 8; Case M.8837 – Blackstone/Thomson Reuters F&R Business, para. 29.
21  Case M.9796 – Uniqa/Axa (Insurance, Asset Management and Pensions – Czechia, Poland and Slovakia),
    paras. 15 and 54; Case M.5075 – Vienna Insurance Group/EBV, paras. 36 and 103.
22  Case M.1712 – Generali/INA, paras. 9 et seq. and Case M.2768 - Generali/Banca Intesa/JV, paras 11-19.
23  Case M.7478 Aviva/Friends Life/Tenet, paragraphs 15-22 and Case M.4844 – Fortis/ABN Amro Assets,
    para. 71; Case M.4284 – AXA/Winterthur, paras. 9 to 10.
                                                        5
 ---pagebreak---         competition concerns even on the basis of the Commission's market definition
        practice related to the life insurance sector. 24
        (C)      Commission’s assessment
(22)    The market investigation indicated that life insurance products are characterised by a
        high degree of supply-side substitutability. In particular, all responding competitors
        active in Hungary that expressed a view and the majority of responding competitors
        active in Romania indicated that competition primarily takes place at the overall
        level of life insurance, since most insurers offer policies covering all life risks (and
        categories).25 The majority of responding competitors in Hungary and Romania also
        submitted that insurers providing one type of life insurance in a given country are
        generally capable of entering and competing to provide other types of life insurance
        in that country. For example, one insurer explained that: “[t]he matter of either
        obtaining an authorization for or a new life class of insurance or creating a new life
        product is not complicated nor does it represent a barrier, bureaucratic, technical or
        otherwise for any company having already a relevant level of experience in the life
        insurance sector”.26 Most responding competitors active in Hungary and all
        responding competitors active in Romania that expressed a view further indicated
        that insurance companies that provide life insurance to individual customers are also
        able to provide life insurance to group customers (and vice versa) without significant
        investments.27
(23)    In the same vein, the majority of customers in Hungary and Romania that expressed
        a view indicated that competition primarily takes place at the overall level of life
        insurance, as most insurers offer policies covering all life risks (and categories).28
        Additionally, most customers in Hungary and Romania that expressed a view
        considered that insurance companies that provide insurance to individual customers
        are also credible as competitors supplying life insurance to group customers (and
        vice versa).29
(24)    In any event, the Commission considers that, for the purposes of the present
        decision, the exact scope of the product market definition for the supply of life
        insurance products can be left open, since the Transaction does not raise serious
        doubts as to its compatibility with the internal market under any plausible product
        market definition.
5.3.1.2. Non-life insurance
        (A)      Commission’s decisional practice
(25)    In the past, the Commission generally considered that, from a demand-side
        perspective, the characteristics and purposes of the different types of non-life
        insurance are distinct, and that there is typically no substitutability between different
24  Form CO, paragraphs 149 – 182.
25  Replies to Q1 - eQuestionnaire – Competitors, questions 5 and 18.
26  Replies to Q1 - eQuestionnaire – Competitors, questions 7 and 20.
27  Replies to Q1 - eQuestionnaire – Competitors, questions 6 and 19.
28  Replies to Q2 - eQuestionnaire – Customers, questions 6 and 20.
29  Replies to Q2 - eQuestionnaire – Customers, questions 7 and 21.
                                                         6
 ---pagebreak---         types of insurance for the customer. 30 In some cases, the Commission considered
        that non-life insurance could be divided into as many different product markets as
        there are types of risks to insure.31
(26)    The Commission's precedents typically consider a distinction between 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.32
(27)    In some cases, the Commission also considered additional segmentations of the non-
        life insurance sector, including based on national insurance classifications or
        between individual and group customers. 33
(28)    However, the Commission also observed that from a supply-side perspective there
        exists a degree of substitutability between various types of non-life insurance
        products, since the conditions for the supply of non-life insurance for certain types of
        risks are quite similar and most large non-life insurers are active in several types of
        risk coverage.34
(29)    The Commission has ultimately always left open the definition of the relevant
        product market for non-life insurance.
        (B)       Notifying Party’s submissions
(30)    The Notifying Party submits that the relevant product market is the market for non-
        life insurance, without further segmentation, in view of the high degree of supply-
        side substitutability between different non-life insurance products. However, it also
        observes that the definition of the relevant product markets of non-life insurance can
        be left open in the present case as the Transaction does not raise competition
        concerns irrespective of the precise product market definition.35
        (C)       Commission’s assessment
(31)    The market investigation indicated that non-life insurance products are characterised
        by a high degree of supply-side substitutability. Competitors of the Parties in
        Hungary and Romania that responded to the market investigation overwhelmingly
        believe that competition primarily takes place at the overall level of non-life
        insurance, since most insurers offer policies covering all non-life risks.36 Most
        competitors active in Hungary and Romania that expressed a view indicated that
        insurers providing one type of non-life insurance are generally capable of entering
30  Case M.9432 – Allianz Holdings/Legal and General Insurance, para. 8.
31  Case M.9796 – Uniqa/Axa (Insurance, Asset Management and Pensions – Czechia, Poland and Slovakia),
    para. 9.
32  Case M.9796 – Uniqa/Axa (Insurance, Asset Management and Pensions – Czechia, Poland and Slovakia),
    para. 9.
33  Case M.9796 – Uniqa/Axa (Insurance, Asset Management and Pensions – Czechia, Poland and Slovakia),
    paras. 8-9, Case M.7478 – Aviva/Friends Life/Telenet, para. 13 and further cases cited.
34  Case M.9432 – Allianz Holdings/Legal and General Insurance, para. 8. Case M.8257 – NN Group/Delta
    Lloyd, paras. 72. and 305.
35  Form CO, paragraphs 192-195.
36  Replies to Q1 - eQuestionnaire – Competitors, question 11.
                                                         7
 ---pagebreak---         and competing to provide other types of non-life insurance.37 Most competitors
        explained that non-life insurance companies providing insurance to individuals are
        also able to provide it to group customers (and vice versa) without significant
        investments. For example, one competitor in Hungary explained that: “[w]e are not
        aware of any structural market barriers that would avoid the companies that offer
        insurance policies to group customers supply retail client (or vice versa). These
        markets are highly integrated”.38
(32)    Similarly, customers’ responses to the market investigation pointed to a high degree
        of supply-side substitutability for non-life insurance products. Most customers in
        Hungary and Romania that expressed a view indicated that they can buy policies
        covering all types of non-life risks from most insurers and consequently that
        competition primarily takes place at the overall level of non-life insurance.39 All
        customers that expressed a view considered that insurers who provide non-life
        insurance to individuals are also credible as competitors for supplying non-life
        insurance to group customers and vice versa.40
(33)    In any event, the Commission considers that, for the purposes of the present
        decision, the exact scope of the product market definition for the supply of non-life
        insurance products can be left open, since the Transaction does not raise serious
        doubts as to its compatibility with the internal market under any plausible product
        market definition.
5.3.1.3. Reinsurance
(34)    The Commission held in previous decisions that reinsurance consists in providing
        insurance cover to another insurer for some or all of the liabilities assumed under its
        insurance policies, in order to transfer risk from the insurer to the reinsurer. The
        Commission has considered a separate market for reinsurance (distinguished from
        the markets for the provision of life and non-life insurance) but has left open the
        question of whether the reinsurance market should be further segmented between life
        and non-life reinsurance.41
(35)    The Notifying Party submits that the relevant product market for reinsurance can be
        left open in the present case as the Transaction does not raise competition concerns
        irrespective of the precise product market definition.42
(36)    The Commission considers that, for the purposes of the present decision, the exact
        scope of the product market definition for the supply of reinsurance can be left open,
        since the Transaction does not raise serious doubts as to its compatibility with the
        internal market under any plausible product market definition.
5.3.1.4. Insurance distribution
(37)    In previous cases, the Commission has analysed whether the market for insurance
        distribution comprises only outward distribution channels or whether it should also
37  Replies to Q1 - eQuestionnaire – Competitors, question 13.
38  Replies to Q1 - eQuestionnaire – Competitors, question 12-12.1.
39  Replies to Q2 - eQuestionnaire – Customers, question 13.
40  Replies to Q2 – eQuestionnaire - Customers, question 14.
41  Case M.8257 – NN Group/Delta Lloyd, paras. 103 to 107.
42  Form CO, paragraphs 198-200.
                                                         8
 ---pagebreak---         be considered to include the sales force and office networks of the insurer (that is to
        say direct sales). This question was ultimately left open. The Commission has also
        considered whether a distinction could be made between the markets for the
        distribution of life and non-life insurance products, as well as whether there was a
        potential separate market for insurance broking, but ultimately left open the relevant
        product market definitions.43
(38)    The Notifying Party submits that the relevant product market for insurance
        distribution can be left open in the present case, as the Transaction does not raise
        competition concerns irrespective of the precise product market definition.44
(39)    The Commission considers that, for the purposes of the present decision, the exact
        scope of the product market definition for the supply of insurance distribution can be
        left open, since the Transaction does not raise serious doubts as to its compatibility
        with the internal market under any plausible product market definition.
5.3.1.5. Asset management
(40)    In previous cases, the Commission has considered the possibility of there being a
        relevant product market for asset management, which would include the creation and
        management of mutual funds for retail clients and tailor-made funds for corporate
        and institutional customers, and portfolio management for private investors, pension
        funds and institutions. The Commission further considered the possible existence of
        separate relevant product markets for each of the types of products mentioned above.
        In previous cases, the Commission has judged that asset management services for
        private individuals should be considered to be distinct from other asset management
        services (as they often form part of retail banking). With regard to the other potential
        narrower markets within asset management (such as a market for custody services),
        the Commission has, however, always left the market definition open. 45
(41)    The Notifying Party submits that the relevant product market for asset management
        can be left open in the present case, as the Transaction does not raise competition
        concerns irrespective of the precise product market definition.46
(42)    The Commission considers that, for the purposes of the present decision, the exact
        scope of the product market definition for the provision of asset management
        services can be left open, since the Transaction does not raise serious doubts as to its
        compatibility with the internal market under any plausible product market definition.
43  Case M.6957 – IF P&C/Topdanmark, paras. 22 to 29. Case M.1307 – Marsh & McLennan/Sedgwick,
    para. 19. With regard to insurance broking in particular, the Commission has considered that it is
    appropriate to define separate relevant product markets for the supply of commercial risk brokerage (i) by
    type of underlying risk, and (ii) at least for certain risk types, by customer type (namely for sales to large
    multinational customers) – Case M.9829 – Aon/Willis Towers Watson, Sections 6.14 and 6.15. [decision
    to be published]
44 Form CO, paragraphs 201-203.
45 Case M.8257 – NN Group/Delta Lloyd, paras. 108 to 111.
46 Form CO, paragraphs 211-214.
                                                              9
 ---pagebreak--- 5.3.2. Geographic market definitions
5.3.2.1. Life insurance
(43)    The Commission has considered that the sector for life insurance products and its
        segments are likely to be national in scope, as a result of national distribution
        channels, established market structures, fiscal constraints and specific regulatory
        systems among Member States.47
(44)    The Notifying Party submits that the relevant geographic market for life insurance
        can be left open in the present case as the Transaction does not raise competition
        concerns irrespective of the precise geographic market definition.48
(45)    The Commission’s investigation did not indicate any reason to depart from its
        previous approach in the present case.
5.3.2.2. Non-life insurance
(46)    The Commission has considered that the sector for non-life insurance products and
        its segments are likely to be national in scope. 49 For certain non-life insurance
        products, including MAT insurance and generally large risk insurance, the
        Commission considered the market is likely to be wider than national in scope. 50
(47)    The Notifying Party submits that the relevant geographic market for non-life can be
        left open in the present case as the Transaction does not raise competition concerns
        irrespective of the precise geographic market definition.51
(48)    The Commission’s investigation did not indicate any reason to depart from its
        previous approach in the present case.
5.3.2.3. Reinsurance
(49)    The Commission has consistently held in its decisional practice that the relevant
        geographic market for reinsurance is worldwide in scope due to the need to pool
        risks on a global basis.52
(50)    The Notifying Party submits that the relevant geographic market for reinsurance can
        be left open in the present case as the Transaction does not raise competition
        concerns irrespective of the precise geographic market definition.53
(51)    The Commission’s investigation did not indicate any reason to depart from its
        previous approach in the present case.
47  Case M.9796 – Uniqa/Axa (Insurance, Asset Management and Pensions – Czechia, Poland and Slovakia),
    para. 10.
48  Form CO, paragraphs 183-184.
49  Case M.9796 – Uniqa/Axa (Insurance, Asset Management and Pensions – Czechia, Poland and Slovakia),
    para. 10.
50  Case M.9796 – Uniqa/Axa (Insurance, Asset Management and Pensions – Czechia, Poland and Slovakia),
    para. 10; Case M.9056 – Generali CEE/AS, para. 16 and further cases cited.
51  Form CO, paragraphs 196-197.
52  Case M.8257 – NN Group/Delta Lloyd, paras. 105 to 107.
53  Form CO, paragraphs 201-203.
                                                      10
 ---pagebreak--- 5.3.2.4. Insurance distribution
(52)     The Commission has previously considered insurance distribution to be national in
         scope but ultimately left the exact definition of the relevant geographic market
         open.54 For certain segments, in particular if they related to brokerage services in
         relation to large commercial or specialty risks, the Commission has considered such
         segments to be EEA-wide or worldwide in scope.55
(53)     The Notifying Party submits that the relevant geographic market for insurance
         distribution can be left open in the present case as the Transaction does not raise
         competition concerns irrespective of the precise geographic market definition.56
(54)     The Commission’s investigation did not indicate any reason to depart from its
         previous approach in the present case. In any event, the Commission considers that,
         for the purposes of the present decision, the exact scope of the geographic market
         definition for the provision of insurance distribution can be left open between EEA-
         wide and worldwide, since the Transaction does not raise serious doubts as to its
         compatibility with the internal market under any plausible geographic market
         definition.
5.3.2.5. Asset management
(55)     The Commission has previously considered asset management to be national or
         EEA-wide in scope but ultimately left the exact definition of the relevant geographic
         market open.57
(56)     The Notifying Party submits that the relevant geographic market for asset
         management can be left open in the present case as the Transaction does not raise
         competition concerns irrespective of the precise geographic market definition.58
(57)     The Commission’s investigation did not indicate any reason to depart from its
         previous approach in the present case. In any event, the Commission considers that,
         for the purposes of the present decision, the exact scope of the geographic market
         definition can be left open between national or EEA-wide, since the Transaction
         does not raise serious doubts as to its compatibility with the internal market under
         any plausible geographic market definition.
5.4.     Competitive Assessment
5.4.1. Horizontal Overlaps
5.4.1.1. Life insurance in Hungary
         (A)      Market structure
(58)     The Notifying Party estimates that the Parties’ combined market share in life
         insurance in Hungary is [10-20]% ([10-20]% for VIG, [5-10]% for AEGON CEE in
54   Case M.8617 – Allianz/LV General Insurance Business, para. 25.
55   Case M.9196 – Marsh & McLennan/Jardine Lloyd Thompson Group, paras. 41 and 49 to 51.
56 Form CO, paragraphs 201-203.
57 Case M.8257 – NN Group/Delta Lloyd, paras. 112 to 115.
58 Form CO, paragraphs 201-203.
                                                      11
 ---pagebreak---  ---pagebreak---  ---pagebreak--- (64)     Third, the Notifying Party further argues that the overall market for life insurance in
         Hungary should not be further segmented due to the high degree of supply-side
         substitutability between the different types of products within the life insurance
         sector. In particular, it notes that the main life insurance competitors are active
         across all segments of life insurance. Therefore, the merged entity will continue to be
         constrained by a sufficient number of competitors across all segments of life
         insurance. Moreover, as these competitors are major insurance groups, they are well
         placed to expand and constrain the merged entity across all product segments. 65
         (C)       Commission’s assessment
(65)     The Transaction gives rise to certain horizontally affected plausible life insurance
         markets in Hungary, with the Parties having market shares generally in the range of
         20-30% but in some cases up to [30-40]%, as illustrated in Table 1 above. 66
         Nevertheless, the Commission considers that the Transaction is unlikely to give rise
         to serious doubts as to its compatibility with the internal market for life insurance
         and its sub-segments in Hungary for the following reasons.
(66)     First, the merged entity will be a moderately sized competitor and will continue to
         face sufficient competitive pressure in the possible market for life insurance and its
         relevant segmentations in Hungary. In life insurance, VIG and AEGON CEE will
         together be the second largest player ([10-20]%).67 The market investigation
         indicated that the Parties’ market share estimates appear accurate and a competitor
         indicated that the merged entity “will not dominate the market in any major product
         segments”.68 This is because the merged entity will continue to face competition
         from market leader Talanx/Magyar Posta ([10-20]%), NN Group ([10-20]%),
         Groupama ([5-10]%), Generali ([5-10]%), Allianz ([5-10]%) and several smaller
         players. Both customers and competitors active in Hungary that responded to the
         market investigation indicated that these are strong life insurers, with competitors
         rating NN Group and Generali as particularly strong, and customers identifying NN
         Group, Groupama and Allianz as particularly strong competitors. 69 All competitors
         and customers that expressed a view indicated that the insurers active in this market
         are an effective competitive constraint on the Parties, and that there will remain
         enough competitive pressure in the Hungarian life insurance market and in each of
65  Form CO, paragraphs 504.
66  For completeness, while value shares are generally comparable with volume shares, on a volume basis the
    merged entity’s share under the HNB’s classification for ‘life insurance with credit coverage to the extent
    it is index-linked or unit linked’ would be [60-70]%, while it would be only [10-20]% on a value basis.
    However, this volume share is almost exclusively due to VIG ([60-70]%), […]. Even if shares were only
    considered on a volume basis the Transaction would not give rise to serious doubts in this segment as: (i)
    there is strong supply-side substitutability across asset classes as described in paragraph (68), (ii) the
    increment from Aegon CEE is low ([0-5]%) and so the competitive landscape would not change
    significantly, (iii) the merged entity will continue to be constrained by rivals – were VIG post-Transaction
    to increase its prices, this would remove its differentiation from competitors who would be well placed to
    erode its volume basis market share.
67 The Commission notes that a concentration giving rise to combined market shares of less than 25% may
    be presumed to be compatible with the internal market pursuant to paragraph 18 of the Horizontal Merger
    Guidelines.
68 Replies to Q1 - eQuestionnaire – Competitors, question 8.3.1.
69 Replies to Q1 – eQuestionnaire – Competitors, question 8 and replies to Q2 – eQuestionnaire –
    Customers, question 9.
                                                             14
 ---pagebreak---         its segments after the Transaction. 70 For example, one customer explained that there
        will be: “[s]till enough big players on the market, we beli[e]ve a fierce competition
        will remain”.71 A competitor indicated this remains true across all relevant life
        insurance products as: “[a]ll the major ones [i.e. competitors] are competing in
        vario[u]s segments”.72
(67)    Second, the Parties are not particularly close competitors. The majority of
        competitors that expressed a view, and all customers that expressed a view, indicated
        that while VIG and AEGON CEE do compete in life insurance and its segments in
        Hungary, there are other insurers who also compete as strongly/closely with them in
        life insurance overall and in each of its segments. 73 For example, one customer
        explained that in its view “VIG is more focusing on corporate clients while Aegon is
        more on individual clients”.74
(68)    Third, the merged entity will face constraints across all segments of life insurance in
        Hungary due to a high degree of supply-side substitutability and the fact that the
        major life insurers are already active across most (if not all) products – as also
        evident from paragraphs (22) and (66) and Table 1 above. Regarding the possibility
        of entry, one competitor explained that “any licensed insurance company can
        provide other types of life insurance”, and the market investigation did not indicate
        any challenges for a life insurance provider to enter new life insurance segments in
        Hungary.75 In any event, life insurers appear already to be active across most life
        insurance segments – one insurer explained that the major insurance companies “are
        present almost everywhere in Hungary. The competition is strong. These companies
        are able to sell insurance products in all types.”76 Customers supported this, noting
        for example that “[f]or the insurance products we purchase, they are offered by most
        insurers”.77 The ease of expansion in a segment where an insurer is already present
        was highlighted by one competitor, which explained “[i]nsurers can flexibly change
        their life product portfolio in line with their business”,78 indicating that they could
        expand to constrain the merged entity in any relevant market segments.
(69)    Finally, respondents to the market investigation indicated that the Transaction would
        not have a negative impact in the market for life insurance (or its plausible
        segmentations) in Hungary. All customers that expressed a view indicated that the
        Transaction would have either a positive or a neutral impact on the competitive
        landscape for life insurance and its segments in Hungary, explaining that “there are
        still enough [insurers with an] offer on the market which maintains competition”.79
        Similarly, all competitors that expressed a view indicated that the Transaction will
70  Replies to Q1 – eQuestionnaire – Competitors, question 8.3 and replies to Q2 – eQuestionnaire –
    Customers, question 9.3.
71  Replies to Q2 – eQuestionnaire – Customers, question 9.3.1.
72  Replies to Q1 – eQuestionnaire – Competitors, question 8.1.
73  Replies to Q1 – eQuestionnaire – Competitors, question 9 and replies to Q2 – eQuestionnaire –
    Customers, question 10
74  Replies to Q2 – eQuestionnaire – Customers, question 10.1
75  Replies to Q1 – eQuestionnaire – Copmetitors, question 7.1.
76  Replies to Q1 - eQuestionnaire – Competitors, question 8.1.
77  Replies to Q2 – eQuestionnaire – customers, question 6.1.
78  Replies to Q1 – eQuestionnaire – Competitors, question 7.1.
79  See replies to Q2 - eQuestionnaire – Customers, question 18
                                                        15
 ---pagebreak---         have a neutral impact on the competitive landscape for life insurance and its
        segments in Hungary.80
        (D)       Conclusion
(70)    In light of the foregoing, the Commission considers that the Transaction does not
        raise serious doubts as to its compatibility with the internal market as a result of
        horizontal non-coordinated effects for the overall life insurance market in Hungary,
        or any of its plausible segmentations.
5.4.1.2. Non-life insurance in Hungary
        (A)       Market structure
(71)    The Notifying Party estimates that the Parties’ combined market share in non-life
        insurance in Hungary is [20-30]% ([5-10]% for VIG, [10-20]% for AEGON CEE).
        Therefore, the Transaction will give rise to a horizontally affected possible market
        for non-life insurance (overall) in Hungary. In addition, the Transaction gives rise to
        further horizontally affected possible markets on certain plausible segmentations of
        non-life insurance in Hungary.
(72)    Table 2 below presents the Notifying Party’s estimates of the Parties’ market shares
        for the possible overall market for non-life insurance in Hungary, as well as for the
        plausible market segmentations in which an affected market arises. The Parties’
        largest competitors active in these segments are also identified. The below Table
        does not present market share estimates for those market segmentations which are
        not horizontally affected by the Transaction (either because the Parties’ market
        shares are less than 20% or because there is no overlap).
(73)    The market share estimates in the following Table are presented on three alternative
        bases: (i) following the Commission’s traditional segmentation of the relevant
        product market, as described in Section 5.3.1.2 above, (ii) following the national
        insurance classification adopted by the Hungarian National Bank (‘HNB’), the
        Hungarian insurance regulator which collects and publishes market data from
        insurance companies in Hungary in its annual HNB Timeseries, and, for
        completeness, (iii) following the alternative segmentation adopted by the
        Association of Hungarian Insurance Companies Magyar Biztosítók Szövetsége
        (‘MABISZ’), which publishes market data annually in its Hungarian Insurers'
        Yearbook.
80  See replies to Q1 - eQuestionnaire – Competitors, question 10.
                                                        16
 ---pagebreak---  ---pagebreak---        entity’s market share remains around [20-30]%. The merged entity will only be the
       second   largest competitor in this market. The largest competitor will continue to be
       Allianz  ([20-30]%). The merged entity will continue to face competition from
       Allianz,  as well as a number of effective competitors. 84
(76)   Second, it argues that VIG and AEGON CEE are not particularly close competitors,
       since the Parties focus on different customer segments. [Confidential information
       regarding the Parties' sales strategies and customer focus.].85
(77)   Third, the Notifying Party submits that it has significantly overestimated the Parties’
       combined market shares for assistance insurance ([80-90]%, with a [0-5]%
       increment). The Parties offer assistance insurance as an ancillary product to the main
       insurance product bought by a customer (for example as an add-on to car insurance).
       This overestimation is because the vast majority of competitors do not report their
       assistance insurance turnover separately from the main product to the Hungarian
       National Bank. AEGON CEE, however, does report assistance insurance turnover
       separately, meaning its share is heavily inflated. [Confidential information regarding
       VIG's sales strategy regarding assistance insurance.].86
(78)   Fourth, the Notifying Party further argues that the overall market for non-life
       insurance in Hungary should not be further segmented due to the high degree of
       supply-side substitutability between the different types of products within the non-
       life insurance sector. In particular, it notes that the main non-life insurance
       competitors are active across all segments of non-life insurance. Therefore, the
       merged entity will continue to be constrained by a sufficient number of competitors
       across all segments of non-life insurance. Moreover, as these competitors are major
       insurance groups, they are well placed to expand and constrain the merged entity
       across all product segments.87
       (C)      Commission’s assessment
(79)   The Transaction gives rise to certain horizontally affected plausible non-life
       insurance markets in Hungary. The Parties have combined market shares generally
       in the range of 20-30% but in some cases up to [30-40]%, as illustrated in Table 2
       above. The only exception is assistance insurance, where AEGON CEE’s market
       share is estimated at [80-90]% and there is a minimal increment from VIG of [0-
       5]%, but AEGON CEE’s market share is significantly overestimated as described
       below. The Commission considers that the Transaction is unlikely to give rise to
       serious doubts as to its compatibility with the internal market for non-life insurance
       and its sub-segments in Hungary for the following reasons.
(80)   First, the merged entity will be a moderately sized competitor and will continue to
       face sufficient competitive pressure in the market for non-life insurance and its
       relevant segmentations in Hungary. In non-life insurance, VIG and AEGON CEE
84  Form CO, paragraphs 15-17.
85  Form CO, paragraphs 660, 667.
86  Form CO, footnote 297 and paragraph 632. RFI 4 paragraph 11-12.
87 Form CO,  paragraph 661.
                                                      18
 ---pagebreak---         will together be the second largest player ([20-30]%).88 The merged entity will face
        competition from market leader Allianz ([20-30]%), Generali ([10-20]%), Groupama
        ([10-20]%), Uniqa ([5-10]%) and several smaller players. The market investigation
        indicated that the Parties’ estimates are accurate, with the exception of travel
        assistance (as described in paragraph (83) below). Both customers and competitors
        active in Hungary indicated that the aforementioned insurers are strong competitors
        to the merged entity, with both customers and competitors identifying Allianz as the
        strongest player, closely followed by the others. 89 All customers that expressed a
        view and the vast majority of competitors that expressed a view considered that these
        insurers will be an effective competitive constraint on VIG and AEGON CEE post-
        Transaction across all segments, and that there will remain sufficient competitive
        pressure in the Hungarian non-life insurance market (and its segments). 90 One
        competitor explained that the Hungarian non-life insurance market “has a lot of
        players [and] is competitive”. This was echoed by another insurer, which explained
        “[t]he multiplicity of market participants and the wide range of products ensure
        competition in the [non-life] insurance market”.91 One customer noted that “[l]arge
        international players are present on the Hungarian market. They create
        competition”, which was supported by a competitor’s comments that “[w]e consider
        the competition quite strong, where large internationals […] are present, but also
        local companies […] this environment [is] a competitive one, regardless of the
        Transaction”.92 Customers and competitors considered that sufficient competitors
        are present across all relevant segments of non-life insurance. For example, one
        customer explained that the main competitors “are credible in all insurance
        segments”.93
(81)    Second, the Parties are not particularly close competitors. While some respondents
        noted that VIG and AEGON CEE are both particularly strong players in relation to
        property and casualty insurance, generally, the view was that they are not
        particularly close competitors to each other. The majority of competitors that
        expressed a view and all customers that expressed a view indicated that while VIG
        and AEGON CEE do compete in non-life insurance and its segments in Hungary,
        there are other insurers who also compete as strongly/closely with them in non-life
        insurance overall and in each of its segments.94 For example, one competitor noted
        that “competition [between the Parties] is the same as among other participants in
        the insurance market”.95 A customer also supported […] that the Parties’ focus is
88  The Commission notes that a concentration giving rise to combined market shares of less than 25% may
    be presumed to be compatible with the internal market pursuant to paragraph 18 of the Horizontal Merger
    Guidelines.
89  Replies to Q1 - eQuestionnaire – Competitors, question 15 and replies to Q2 – eQuestionnaire –
    customers, question 16
90  Replies to Q1 - eQuestionnaire – Competitors, question 15.3 and replies to Q2 – eQuestionnaire –
    customers, question 16.3.
91  Replies to Q1 - eQuestionnaire – Competitors, question 15.3.1.
92  Replies to Q1 - eQuestionnaire – Competitors, question 15.3.1 and replies to Q2 – eQuestionnaire –
    customers, question 16.3.1.
93  Replies to Q2 – eQuestionnaire – customers, question 16.1.
94  Replies to Q1 - eQuestionnaire – Competitors, question 16 and replies to Q2 – eQuestionnaire –
    customers, question 17.
95  Replies to Q1 - eQuestionnaire – Competitors, question 16.1.
                                                        19
 ---pagebreak---         differentiated, explaining that “VIG is strong in corporate non-life while Aegon is
        not that much”.96
(82)    Third, the merged entity will face constraints across all segments of non-life
        insurance in Hungary due to a high degree of supply-side substitutability and the fact
        that the major non-life insurers are already active across most (if not all) products –
        as also evident from paragraphs (31), (32) and (80) and Table 2 above. Regarding
        the possibility of entry, one competitor explained that “[t]he market is also fairly
        open to cross border service providers and newcomers too”.97 In any event,
        competitors responding to the market investigation indicated that the main non-life
        insurance competitors are already active across all relevant segments. One
        competitor explained that “Most market players are universal companies, offering
        products in most/all non-life classes […]. Product-specialized insurance companies
        are very rare and play a niche role”. Another noted that “[t]he product range of
        companies operating in the non-life field is very wide and there is competition in all
        fields”.98 This view was also shared by customers. 99 The Commission’s investigation
        did not give any reason to consider that rivals would face challenges to expand their
        existing presence in particular in non-life insurance segments – quite the contrary,
        given that respondents considered that sufficient competitive pressure will remain
        across all segments after the Transaction. 100
(83)    Fourth, regarding assistance insurance, the Notifying Party’s market share estimates
        appear to be significantly overestimated. All competitors responding to the market
        investigation indicated that they report their gross written premiums for assistance
        insurance policies to the Hungarian National Bank alongside the ‘main’ policy (such
        as motor or travel insurance), to which the assistance insurance policies are ancillary.
        They do not report assistance insurance separately. 101 Therefore, it is clear that
        AEGON CEE’s market share estimates are overstated, as AEGON CEE does report
        these figures separately. Six major insurers responding to the market investigation
        indicated that they provide assistance insurance services, and the market
        investigation did not give rise to any indication that the Transaction would result
        concentration for this product segment. Customers were split evenly between those
        who procure assistance insurance as an ancillary product together with the ‘main’
        insurance policy, and those who procure assistance insurance as a standalone policy
        from a different insurer than that which sells their ‘main’ policy. 102 Post-Transaction,
        customers will therefore continue to have access to assistance insurance policies both
        from their ‘main’ insurer and others, as well as importantly from a number of
        competitors besides the merged entity.
(84)    Finally, respondents to the market investigation indicated that the Transaction would
        not have a negative impact in the market for non-life insurance (or its plausible
        segmentations) in Hungary. All customers that expressed a view indicated that the
        Transaction would have either a positive or a neutral impact on the competitive
96  Replies to Q2 – eQuestionnaire – customers, question 16.2.
97  Replies to Q1 - eQuestionnaire – Competitors, question 17.1.
98  Replies to Q1 - eQuestionnaire – Competitors, question 11.1.
99  Replies to Q2 – eQuestionnaire – customers, question 16.1.
100 Replies to Q1 - eQuestionnaire – Competitors, question 15.3 and replies to Q2 – eQuestionnaire –
    customers, question 16.3.
101 Replies to Q1 - eQuestionnaire – Competitors, question 14.
102 Replies to Q2 – eQuestionnaire - customers, question 15.
                                                        20
 ---pagebreak---         landscape for non-life insurance and its segments in Hungary; for example, one
        explained that “there is still enough competition”.103 As regards competitors, one
        insurer considered that the Transaction may have a negative impact on competition.
        However, this was a minority view as the vast majority of competitors that expressed
        a view indicated that the Transaction will have a neutral impact on the competitive
        landscape for non-life insurance and its segments in Hungary. 104
        (D)      Conclusion
(85)    In light of the foregoing, the Commission considers that the Transaction does not
        raise serious doubts as to its compatibility with the internal market as a result of
        horizontal non-coordinated effects for the overall non-life insurance market in
        Hungary, or any of its plausible segmentations.
5.4.1.3. Life insurance in Romania
        (A)      Market structure
(86)    The Notifying Party estimates that the Parties’ combined market share in life
        insurance in Romania is [20-30]% ([10-20]% for VIG, [5-10]% for AEGON CEE).
        Therefore, the Transaction will give rise to a horizontally affected possible market
        for life insurance (overall) in Romania. In addition, the Transaction gives rise to
        further horizontally affected markets on certain plausible segmentations of life
        insurance in Romania.
(87)    The Table 3 below presents the Notifying Party’s estimates of the Parties’ market
        shares for the overall market for life insurance in Romania, as well as for the
        plausible market segmentations in which an affected market arises. The Parties’
        largest competitors active in these segments are also identified. The below Table
        does not present market share estimates for those market segmentations which are
        not horizontally affected by the Transaction (either because the Parties’ market
        shares are less than 20% or because there is no overlap).
(88)    The market share estimates in the following Table are presented on two alternative
        bases: (i) following the Commission’s traditional segmentation of the relevant
        product market, as described in Section 5.3.1.1 above, and (ii) following the national
        insurance classification adopted by the Romanian Financial Supervision Authority
        (‘ASF’), the Romanian insurance regulator which collects and publishes market data
        from insurance companies in Romania in its annual report on the Development of
        the Insurance Market.
103 Replies to Q2 – eQuestionnaire – Customers, question 18 and 18.1.
104 Replies to Q1 - eQuestionnaire – Competitors, question 17 and 17.1.
                                                        21
 ---pagebreak---  ---pagebreak---         (C)      Commission’s assessment
(93)    The Transaction gives rise to certain horizontally affected plausible life insurance
        markets in Romania, with the Parties having market shares in the range of 20-30%,
        as illustrated in Table 3 above. The Commission considers that the Transaction is
        unlikely to give rise to serious doubts as to its compatibility with the internal market
        for life insurance and its sub-segments in Romania for the following reasons.
(94)    First, the merged entity will be a moderately sized competitor and will continue to
        face sufficient competitive pressure in the market for life insurance and its relevant
        segmentations in Romania. In life insurance, VIG and AEGON CEE will together be
        the second largest player ([20-30]%).108 The market investigation indicated that the
        Parties’ market share estimates appear accurate and the increment is limited as
        AEGON CEE is considered to be a small player. 109 Moreover, the merged entity will
        continue to face competition from market leader NN Group ([30-40]%),
        Metropolitan Life ([10-20]%), BRD ([5-10]%), Allianz ([5-10]%), Signal Iduna ([5-
        10]%) and several smaller players. Both customers and competitors active in
        Romania that responded to the market investigation indicated that these are strong
        life insurers and supported the view that NN Group, Allianz and Metropolitan Life
        are the strongest competitors (with customers also rating Generali highly). 110 All
        competitors and most customers that expressed a view indicated that these insurers
        are an effective competitive constraint on the Parties, and that there will remain
        enough competitive pressure in the Romanian life insurance market and in each of its
        segments after the Transaction. One insurer elaborated that the penetration of life
        insurance is relatively low in Romania and so there is considerable room for growth
        and competition in the market, while pointing out that post-Transaction “there are
        also other very strong competitors on the market”.111
(95)    Second, the Parties are not particularly close competitors. The majority of
        competitors that expressed a view indicated that the Parties do not compete closely,
        with the remainder of competitors and all customers that expressed a view stating
        that while VIG and AEGON CEE do compete in life insurance and its segments in
        Romania, there are other insurers who also compete as strongly/closely with them in
        life insurance overall and in each of its segments. 112 For example, one competitor
        explained that in its view “other important players are active (NN, BRD, Groupama,
        Allianz, Generali) with relatively similar product design and features”.113
(96)    Third, the merged entity will face constraints across all segments of life insurance in
        Romania due to a high degree of supply-side substitutability and the fact that the
        major life insurers are already active across most (if not all) products – as also
108 The Commission notes that a concentration giving rise to combined market shares of less than 25% may
    be presumed to be compatible with the internal market pursuant to paragraph 18 of the Horizontal Merger
    Guidelines.
109 Replies to Q1 - eQuestionnaire – Competitors, question 21      and replies to Q2 – eQuestionnaire –
    customers, question 22.
110 Replies to Q1 - eQuestionnaire – Competitors, question 21      and replies to Q2 – eQuestionnaire –
    customers, question 22.
111  Replies to Q1 - eQuestionnaire – Competitors, questions        21.3 and 21.3.1 and replies to Q2 –
    eQuestionnaire – customers, questions 22.3 and 22.3.1.
112 Replies to Q1 - eQuestionnaire – Competitors, question 22      and replies to Q2 – eQuestionnaire –
    customers, question 23.
113 Replies to Q1 - eQuestionnaire – Competitors, question 22.1.
                                                         23
 ---pagebreak---         evident from paragraphs (22), (23) and (94) and Table 3 above. Regarding the
        possibility of entry in new segments, one competitor explained that “In general, life
        and composite insurers with significant activity have the ability to expand to
        different insurance classes”. Another added that “[i]t is possible for one insurer to
        expand its range of life products offered by including products addressing different
        client segments. This type of expanding the business was visible in the past in the
        Romanian market”.114 In any event, life insurers appear already to be active across
        most life insurance segments – one insurer explained that “most life and composite
        insurers are offering an extended range of insurance products/ classes”, with
        another adding: “major players cover all insurance risks”.115 Customers supported
        this, noting for example that “[f]or the insurance products we purchase, they are
        offered by most insurers”.116 Moreover, the market investigation did not indicate
        any challenges for a life insurance provider to expand in life insurance segments
        where it is already active in Romania – quite the contrary, given that respondents
        considered that sufficient competitive pressure will remain across all segments. 117
(97)    Finally, the market investigation indicated that the Transaction would be unlikely to
        have a negative impact in the market for life insurance (or its plausible
        segmentations) in Romania. One customer did indicate that the Transaction might
        have a negative impact on the market, while acknowledging that NN Group, and not
        the merged entity, would remain the largest insurer. 118 However, another customer
        explained that “the Transaction is with a relatively small life insurance company in
        Romania (Aegon) [so] we are not foreseeing important effects in [the] life insurance
        market”. This absence of concerns was supported by competitors – all competitors
        that expressed a view considered that the Transaction would have a neutral impact
        on the market. They explained that “there are other strong players in the market
        able to exercise competitive pressure on the merged entity”. Another competitor
        added that “Aegon has had a marginal presence/success on Romanian market,
        therefore we consider the Transaction will have a limited impact on this market”, a
        view that was echoed by other insurers.”119
        (D)      Conclusion
(98)    In light of the foregoing, the Commission considers that the Transaction does not
        raise serious doubts as to its compatibility with the internal market as a result of
        horizontal non-coordinated effects for the overall life insurance market in Romania
        or any its plausible segmentations.
5.4.1.4. Overall conclusion on horizontally affected markets
(99)    In conclusion, for the reasons set out above, in paragraphs (58) to (98), the
        Commission considers that the Transaction does not raise serious doubts as to its
        compatibility with the internal market as a result of horizontal non-coordinated
114 Replies to Q1 - eQuestionnaire – competitors, question 20.1
115 Replies to Q1 - eQuestionnaire – competitors, question 18.1.
116 Replies to Q2 - eQuestionnaire – Customers, question 20.1.
117 Replies to Q1 - eQuestionnaire – Competitors, question 15.3 and replies to Q2 – eQuestionnaire –
    customers, question 16.3.
118 Replies to Q2 – eQuestionnaire – customers, question 24.
119 Replies to Q1 - eQuestionnaire – Competitors, question 23 and 23.1.
                                                         24
 ---pagebreak---          effects concerning the markets for life and non-life insurance in Hungary and life
         insurance in Romania.
5.4.2. Vertical Overlaps
5.4.2.1. Reinsurance worldwide (upstream), insurance production in Hungary, Romania,
           Bulgaria, Slovakia, Latvia (downstream)
(100) Both Parties are active on the upstream market for reinsurance and provide
         reinsurance to external clients for life and non-life risks. The Transaction thus gives
         rise to a vertically affected link between VIG and AEGON CEE’s worldwide
         reinsurance activities and the Parties’ activities in life and non-life insurance (and
         their relevant sub-segments) in Hungary, Romania, Bulgaria, Czechia, Slovakia and
         Latvia.
(101) Upstream, the Notifying Party estimates that the Parties’ combined market share in
         the supply of reinsurance is around [0-5]% at worldwide level.120 Even if the
         relevant product market were segmented between reinsurance for life insurance and
         reinsurance for non-life insurance, the Parties’ combined market share would be less
         than [0-5]% (on either basis) worldwide.121
(102) Downstream, for the production of insurance, the Notifying Party estimates that the
         Parties’ market shares exceed 30% on certain plausible life and non-life insurance
         markets in Hungary122 and Romania123 as well as Bulgaria, Czechia, Slovakia and
         Latvia.124 However, in each case the Parties’ market shares would be no higher than
         [30-40]%, with two very limited exceptions in Hungary. 125
120 Section 3 of the response to RFI 6.
121 Reply to RFI 8 question 1.
122 In Hungary, there would be no vertically affected market for the provision of life insurance (overall) or
    non-life insurance (overall). However, if these product markets are further segmented the Notifying Party
    estimates that the Parties’ market shares in Hungary would be [30-40]% for group life insurance and for
    group pure risk protection life insurance in 2020 (Table 5(1) and Table 5(2) of the response to RFI 6).
    Similarly, for property insurance, under certain HNB and MABISZ segmentations the Parties’ market
    shares would be [30-40]% and would be [80-90]% in relation to assistance insurance (Table 7B(20) and
    Table 7B(29) of the Form CO. Estimates relate to 2020 for HNB and 2019 for MABISZ (as 2020 data is
    not yet available).
123 In Romania, the Parties’ market shares are less than 30% in life and non -life insurance, but on a narrower
    basis the Parties’ market shares would be [30-40]% in savings and investment life insurance in 2020
    (Table 7C(8) of the Form CO).
124 VIG’s market share in the provision of life insurance was [30-40]% in Bulgaria, [30-40]% in Czechia and
    [30-40]% in Slovakia. In non-life insurance, VIG’s market share was [30-40]% in Latvia. These estimates
    relate to the 2019 year, but the Notifying Party submits that they would not be significantly different on
    the basis of the available figures for Q1-Q3 of 2020, except for life insurance in Bulgaria where VIG’s
    market share would be lower, at [20-30]%. (Form CO, paragraph 320)
125 The first exception is for assistance insurance in Hungary ([80-90]%), however, as detailed in paragraph
    (83) above, this estimate significantly overstates the Parties’ market shares and does not accurately reflect
    the fact that assistance insurance is generally offered together with other insurance products. The second
    exception is for the HNB’s classification of ‘other retirement insurance’ in Hungary, where AEGON CEE
    has a [70-80]% share. This relates to a segment of retirement insurance policies which do not allow
    customers to benefit from a tax allowance (the vast majority do); this segment is accordingly less popular
    with customers and small (Response to RFI 8, question 2). Established suppliers providing retirement
    insurance with tax benefits can easily enter this segment. In any event, there are no reinsurers that
    exclusively provide their upstream services for ‘other retirement insurance’ in Hungary, i.e. without also
    providing such services for ‘retirement insurance’ more broadly (where the Parties’ shares are only [20-
                                                           25
 ---pagebreak--- (103) The Notifying Party submits that notwithstanding the Parties’ downstream shares the
         Transaction does not give rise to any risk of customer foreclosure of the Parties’
         rival providers of reinsurance, given the Parties’ negligible combined market share
         of the worldwide reinsurance market. 126
(104) The Commission assesses below the risk that the merged entity would seek to
         engage in customer foreclosure of insurance production with a view to foreclosing
         competing reinsurers upstream. For completeness, the Commission considers that
         input foreclosure is implausible given the Parties’ combined upstream market shares
         of [0-5]% in reinsurance worldwide.
(105) The Commission observes that downstream the merged entity’s shares remain
         moderate ([30-40]%) and that in each plausible national market a number of credible
         insurance providers will remain. Moreover, providers of reinsurance will continue to
         be able to turn not just to customers in Hungary, Romania, Bulgaria, Czechia,
         Slovakia and Latvia, but also worldwide. As such, the merged entity is unlikely to
         have the ability to engage in customer foreclosure. Its negligible base of sales
         upstream (less than [0-5]% market share of reinsurance worldwide on any plausible
         definition) means that the merged entity is also unlikely to have the incentive to
         engage in such a strategy. All insurers responding to the Commission’s market
         investigation that expressed a view considered that the Transaction would have a
         neutral impact on the market for reinsurance. 127
(106) For the above reasons, the Commission considers that the Transaction does not raise
         serious doubts as to its compatibility with the internal market as regards the vertical
         links between the upstream market for reinsurance worldwide and the downstream
         markets for insurance production in Hungary, Romania, Bulgaria, Czechia, Slovakia
         or Latvia.
5.4.2.2. Asset management in Hungary and the EEA (upstream), insurance production in
            Hungary (downstream)
(107) AEGON CEE is active in the provision of asset management services in Hungary.
         VIG is not active in Hungary, but is active in other Member States. 128 The
         Transaction gives rise to a vertically affected link between the Parties’ asset
         management activities in Hungary or the EEA and their life and non-life insurance
         activities.
(108) Upstream, for the provision of asset management, the Notifying Party estimates that
         AEGON CEE’s market share is [5-10]% in Hungary. It is the fourth largest asset
         manager in Hungary after OTP group ([20-30]%), ERSTE ([10-20]%) and K&H
         ([10-20]%), while also facing competition from a number of similarly sized rivals
         (MKB-Pannonia, Hold Alapkezelő and Allianz all have market shares of [5-10]%).
    30]%) or for other product types. The same is also true for assistance insurance (Response to RFI 8
    questions 2-3, to the best of the Parties’ knowledge). Therefore, customer foreclosure in these segments is
    implausible as the merged entity would lack the ability to engage in such a strategy.
126 Form CO, paragraphs 323-324.
127 See replies to Q1 - eQuestionnaire – Competitors, questions 24-27.
128 VIG currently has minor activities in asset management, primarily in Bulgaria. It is not active in Poland or
    Romania (i.e. where AEGON CEE is active in insurance production downstream) and s o no other national
    vertically affected markets arise (Response to RFI 8, question 5). [Confidential information regarding
    VIG's asset management business ].
                                                          26
 ---pagebreak---          Its market share would be [10-20]% on a narrower market of asset management
         services for institutional customers in Hungary, and [5-10]% or less on all other
         plausible segmentations. In the EEA, both VIG and AEGON CEE would hold a
         market share of less than [0-5]% on any plausible segmentation.129
(109) Downstream, for the production of insurance, the Notifying Party estimates that the
         Parties’ market shares exceed 30% on certain plausible life and non-life insurance
         markets in Hungary,130 Romania,131 Bulgaria, Czechia, Slovakia and Latvia. 132
         However, in each case the merged entity’s market shares would be no higher than
         [30-40]%, with two limited exceptions.133
(110) The Notifying Party submits that the Transaction does not give rise to any risk of a
         customer foreclosure strategy targeted against rival asset managers, given the
         Parties’ moderate combined market shares in the downstream markets for life and
         non-life insurance and the presence of a number of alternative insurance providers
         that asset managers can sell to.134
(111) The Commission assesses below the risk that the merged entity would seek to
         engage in customer foreclosure of insurance production with a view to foreclosing
         competing asset managers upstream. For completeness, the Commission considers
         that input foreclosure is implausible given the Parties’ combined upstream market
         shares of [5-10]-[10-20]% in asset management in Hungary and less than [0-5]% in
         the EEA.
(112) The Commission observes that, regarding the link in Hungary specifically, in the
         upstream production of insurance the merged entity’s shares remain moderate on the
         narrowest plausible segmentations ([30-40]%) and on the wider downstream markets
         for life and non-life insurance its market shares are only [10-20]-[20-30]%. Post-
         Transaction, a number of significant insurers will remain both in the overall markets
         and in each plausible segmentation, meaning that asset managers will continue to
         have a broad and sufficient customer base of Hungarian insurers to turn to even if the
         merged entity were to attempt a foreclosure strategy. Likewise, as regards the
         vertical link at EEA-level, notwithstanding the merged entity’s national market
         shares in insurance a number of large international insurers will remain across the
         EEA post-Transaction for asset managers to sell to. Upstream, the Parties have a
         very limited presence in asset management. Therefore, it is unlikely that the merged
         entity would have the ability or incentive to engage in such a strategy in Hungary or
         at EEA-level. In addition, all insurers responding to the Commission’s market
129 Section 4 of the response to RFI 6. Estimates relate to 2020.
130 As described in footnote 122 above for Hungary.
131 As described in footnote 123 above for Romania.
132 As described in footnote 124 above for these countries.
133 These exceptions are assistance insurance in Hungary ([80-90]%) and ‘other retirement insurance’ in
    Hungary under the HNB’s classification, as described in footnote 125. There are no asset managers used
    by VIG or AEGON CEE that only distribute either assistance insurance o r ‘other retirement insurance’
    products in Hungary (Response to RFI 8 questions 2-3, to the best of the Parties’ knowledge), and the
    Parties’ market shares on broader relevant insurance markets are considerably lower. Therefore, input
    foreclosure is implausible as the merged entity would lack the ability to engage in such a strategy.
134 Form CO, paragraph 367.
                                                           27
 ---pagebreak---          investigation that expressed a view considered that the Transaction would have a
         neutral impact on the market for asset management. 135
(113) For the above reasons, the Commission considers that the Transaction does not raise
         serious doubts as to its compatibility with the internal market as regards the vertical
         links between the upstream markets for asset management in Hungary or the EEA
         and the downstream markets for insurance production in Hungary, Romania,
         Bulgaria, Czechia, Slovakia or Latvia.
5.4.2.3. Insurance production in Hungary (upstream), insurance distribution in Hungary
            (downstream)
(114) VIG distributes insurance products in Hungary for third parties and on its own
         behalf. AEGON CEE distributes insurance products on its own behalf (only) in
         Hungary.136 The Transaction gives rise to a vertically affected link between the
         Parties’ life and non-life insurance activities in Hungary and their insurance
         distribution activities in Hungary.
(115) Upstream, for the production of insurance, the Notifying Party estimates that the
         Parties’ market shares exceed 30% on certain plausible life and non-life insurance
         markets in Hungary.137 However, in each case the Parties’ market shares would be
         no higher than [30-40]%, with two very limited exceptions.138
(116) Downstream, the Notifying Party estimates that VIG’s market share in the
         distribution of insurance products for third parties (i.e. outward channel only) would
         be [5-10]% or less. It would also be [5-10]% or less on any plausible (narrower)
         market definition.139 If both outward and direct distribution were considered, the
         Parties’ combined market share would be less than [10-20]% on any plausible
         definition in Hungary […]. At EEA-level, the Parties’ market shares would be less
         than [0-5]% on all plausible definitions.140
(117) The Notifying Party submits that the Transaction does not give rise to any risk of an
         input foreclosure targeted against rival insurance distribution providers, given the
         Parties’ moderate combined market shares in upstream markets for life and non-life
         insurance in Hungary.141
135 See replies to Q1 - eQuestionnaire – Competitors, question 24.
136 AEGON CEE distributes third parties’ insurance products in Poland and VIG distributes (only) its own
    insurance products in Poland. However, this vertical link with the Parties’ activities in the production of
    insurance in Poland is not vertically affected on any plausible market definition and so is not discussed
    further in this decision.
137 See footnote 122 above, which outlines the segments in Hungary on which the Parties’ combined market
    shares are 30% or higher.
138 With the exception of assistance insurance in Hungary ([80-90]%) and ‘other retirement insurance’ under
    the HNB’s classification, as described in footnote 125. There are no insurance distributors used by VIG or
    AEGON CEE that only distribute either assistance insurance or ‘other retirement insurance’ products in
    Hungary (Response to RFI 8 questions 2-3, to the best of the Parties’ knowledge), and the Parties’ market
    shares on broader markets are considerably lower. Therefore, input foreclosure is implausible as the
    merged entity would lack the ability to engage in such a strategy.
139 Form CO, paragraph 332.
140 Response to RFI 8 question 6.
141 Form CO, paragraphs 336-337.
                                                         28
 ---pagebreak--- (118) The Commission assesses below the risk that the merged entity would seek to
        engage in input foreclosure of insurance production with a view to foreclosing
        competing distributors downstream. For completeness, the Commission considers
        that customer foreclosure is implausible given that VIG only has a market share of
        less than [5-10]% in the (outward) provision of insurance distribution services to
        third parties in Hungary and that AEGON CEE is not active in this market.
(119)    The Commission observes that in the upstream production of insurance the merged
        entity’s shares remain moderate ([30-40]%) and that in each plausible Hungarian
        market a number of credible insurance providers will remain. In Hungary, the vast
        majority of insurance products are sold to consumers via intermediated channels:
        less than 2% of life insurance is sold directly by insurers to consumers and less than
        16% of non-life insurance is sold directly. [Confidential information regarding the
        Parties' distribution strategies].142 In view of this and the Parties’ small market shares
        in the market for insurance distribution, it is unlikely that the merged entity would
        have the ability or incentive to internalise its distribution of insurance (i.e. switch to
        exclusively or predominantly direct sales) with a view to foreclosing rival insurance
        distributors as such a strategy would put at risk the majority of its insurance
        production sales. In addition, all insurers responding to the Commission’s market
        investigation that expressed a view considered that the Transaction would have a
        neutral impact on the market for insurance distribution in Hungary. 143
(120) For the above reasons, the Commission considers that the Transaction does not raise
        serious doubts as to its compatibility with the internal market as regards the vertical
        links between the upstream markets for insurance production in Hungary and the
        downstream markets for insurance distribution in Hungary (or the EEA).
6.      CONCLUSION
(121) 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
                                                              Executive Vice-President
142 Form CO, paragraphs 784-787 and 822-826.
143 See replies to Q1 - eQuestionnaire – Competitors, question 24.
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