CELEX: 32014M7233
Language: en
Date: 2014-06-10 00:00:00
Title: Commission Decision of 10/06/2014 declaring a concentration to be compatible with the common market (Case No COMP/M.7233 - ALLIANZ / GOING CONCERN OF UNIPOLSAI ASSICURAZIONI) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

                                        Brussels, 10.6.2014
                                        C(2014) 3981 final

                                        |In the published version of this decision, some information |           |Public version                                                 |
|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|omitted has been replaced by ranges of figures or a general |           |                                                               |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.                                                |           |                                                               |
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|                                                            |           |MERGER PROCEDURE                                               |
|                                                            |           |ARTICLE 6(1)(b) DECISION                                       |

|                                                                       |To the notifying party                                              |

Dear Sir/Madam,

Subject:    Case M.7233 – Allianz/ Going concern of UnipolSai Assicurazioni
         Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1]

 1) On 29 April 2014, the European Commission received a notification of a proposed concentration pursuant to Article 4  of  Council  Regulation
    (EC) No 139/2004 by which the undertaking Allianz S.p.A. ("Allianz", Italy), referred to as 'the Notifying Party', controlled ultimately  by
    the Allianz Group (Germany), acquires within the meaning of Article 3(1)(b) of Regulation 139/2004 sole  control  of  a  non-life  insurance
    going concern (the "Target", Italy) currently owned by UnipolSai Assicurazioni S.p.A. ("UnipolSai", Italy), by way  of  purchase  of  assets
    (the "Transaction").

THE PARTIES

 2) Allianz Group is a worldwide provider of financial services, active in the provision of life and non-life insurance, reinsurance  and  asset
    management. Allianz is a subsidiary of Allianz Group.

 3) The Target is a going concern consisting of a portion of UnipolSai's non-life insurance business and includes certain assets and liabilities
    of the former Milano Assicurazioni S.p.A, including its business division Sasa. In particular, the Target includes  agency  agreements  with
    agencies which are currently part of the distribution network of UnipolSai, employees dedicated to such distribution  network  and  non-life
    insurance portfolio policies. The Target is active in all the Italian non-life insurance market segments in Italy, with the exception of the
    credit and suretyship insurance business.

THE CONCENTRATION

 4) The Transaction concerns the acquisition of sole control by Allianz of the Target, which is currently owned by  UnipolSai.  UnipolSai  is  a
    listed company solely controlled by the holding Unipol Gruppo Finanziario S.pA., and will remain active in the non-life  insurance  business
    in Italy.

 5) The Transaction will be executed as follows: (i) […].[2] A legally binding Insurance Business Acquisition Agreement ("IBAA") was  signed  on
    15 March 2014.

EU DIMENSION

 6) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million (Allianz Group: EUR 113 932 million,
    Target: EUR [1 100] million).[3] Each of them has an EU-wide turnover in excess of EUR 250 million  (Allianz  Group:  EUR  77  160  million,
    Target: EUR [1 100] million). The Allianz Group does not achieve more than two-thirds of its aggregate EU-wide turnover within one  and  the
    same Member State, while the Target generates its entire EU-wide turnover in Italy.

 7) Therefore, the Transaction has an EU dimension, within the meaning of Article 1(2) of Regulation 139/2004.

RELEVANT MARKETS

    Product Market Definition

 8) In previous decisions relating to the insurance sector, the Commission  has  distinguished  between  three  broad  categories  of  insurance
    products: life insurance, non-life insurance and reinsurance.[4] It has also made a distinction between, on the one hand, a  product  market
    for the provision of insurance products (which is segmented into three markets as described above) and, on the other hand, a product  market
    for the distribution of insurance products. As the Target's activities are  concentrated  in  non-life  insurance,  these  markets  will  be
    analysed in the following.

     a) Non-life insurance

 9) In previous decisions,[5] the Commission noted that, from a demand-side perspective, non-life insurance may at least in  theory  be  divided
    into as many individual product markets as there are different kinds of risks covered, given that characteristics, premiums and purposes are
    distinct and that there is no substitutability from the consumer’s perspective between different risks insured.

10) However, the Commission has also recognised that from a supply-side perspective the conditions for insurance of different types of risks are
    quite similar and most large insurance companies are active in several types of  risk.  This  suggests  that  different  types  of  non-life
    insurance could be included in the same product market.[6]

11) Accordingly, the Commission has in the past considered a distinction between the following segments: (i) accident and sickness;  (ii)  motor
    vehicle; (iii) property; (iv) marine, aviation and transport ("MAT"); (v) liability; (vi) credit and suretyship; and (vii) travel.[7]

12) In some of its previous decisions,[8] the Commission has also made reference to the applicable national insurance classification, as well as
    to the case practice of the national regulatory agencies.

13) For this reason, the Notifying Party also provided the Commission with the relevant segmentation applied by  the  Italian  Autorità  Garante
    della Concorrenza e del Mercato ("AGCM"), which considers that each of with 18 regulatory classes in which non-life insurance is categorised
    under Italian law amounted to a separate product market.[9] Those 18 classes are as follows: (1) accident; (2) sickness; (3) land  vehicles;
    (4) railway rolling stock; (5) aircraft; (6) ships; (7) goods in transit; (8) fire and natural forces; (9) other damage  to  property;  (10)
    motor vehicle liability; (11) aircraft liability; (12) liability for ships; (13)  general  liability;  (14)  credit;  (15) suretyship;  (16)
    miscellaneous financial loss; (17) legal expenses; and (18) assistance.

14) The Notifying Party argues that those 18 classes may however be reconciled  with  the  Commission's  case  practice  through  the  following
    groupings: (i) accident and illness (no. 1 and no. 2); (ii) motor insurance (no. 3 and no. 10); (iii) fire and other damage to property (no.
    8 and no. 9); (iv) MAT (no. 4, no. 5, no. 6, no. 7, no. 11 and no. 12); (v) liability (no. 13); (vi) credit and suretyship (no. 14  and  no.
    15); (vii) travel (no. 18); and (viii) residual categories (no. 16 and no. 17).

15) In any event, the exact product market definition for the provision of non-life insurance products can be left open, as the Transaction does
    not raise any serious doubts as to its compatibility with the internal market under every market definition considered.

     b) Insurance distribution

16) In its previous decisions,[10] the Commission has identified a downstream market for distribution of insurance products, which involves  the
    procurement of insurance cover for individual and corporate customers through different distribution channels, whether comprised  of  direct
    writers, tied agents or intermediaries such as banks and brokers.

17) However, the Commission has left open the question as to whether the market for insurance distribution  comprises  exclusively  all  outward
    (i.e. non-owned and third-party) insurance distribution channels (e.g. brokers and agents), or if the sales forces and  office  networks  of
    insurance undertakings (constituting a  direct  means  of  sale  to  end-customers)  should  also  fall  within  the  market  for  insurance
    distribution.[11]

18) In addition, the Commission has also considered that a distinction could be made between the distribution of  non-life  and  life  insurance
    products due to differences in the applicable regulatory regime and the fact that different providers are involved in  the  distribution  of
    life and non-life insurance products.[12]

19) In any event, the exact product market definition for the distribution of insurance products can be left open, as the Transaction  does  not
    raise any serious doubts as to its compatibility with the internal market under every market definition considered.

    Geographic market definition

     a) Non-life insurance

20) In previous decisions, the Commission has generally considered the market for the provision of non-life insurance products and  its  various
    sub-segments as national, with the exception of (i) large commercial risks, such as the insurance of aerospace risks, which is  most  likely
    to be at least EEA-wide in scope and, (ii) the MAT insurance market, which is likely to  be  wider  than  national  for  large/multinational
    corporate customers and large risk insurance respectively.[13] However, the Commission ultimately left the exact  scope  of  the  geographic
    market open.

21) The Notifying Party agrees with the Commission's case practice and also points out such an approach is in line with the one adopted  by  the
    AGCM, considering the market for non-life insurance products and its sub-segments to be national in scope.

22) In any event, the exact geographic market definition for the provision of non-life insurance products can be left open, as  the  Transaction
    does not raise any serious doubts as to its compatibility with the internal market under every market definition considered.

     b) Insurance distribution

23) In previous decisions,[14] the Commission, while recognising the  national  nature  of  insurance  distribution  channels,  left  the  exact
    geographic market definition open, in particular with respect to the question as to whether the relevant geographic market  could  be  wider
    than national.

24) With regard to the Italian market,[15] the Commission has in some of its previous decisions also assessed whether a narrower segmentation at
    a local level would be appropriate.

25) The Notifying Party supports the Commission's practice with respect to the geographic dimension  of  the  market  for  the  distribution  of
    insurance products, but explains that, in its case practice, the AGCM has  regarded  this  as  narrower  than  national,  at  the  level  of
    administrative provinces, due to the perceived lack of mobility of customers.[16] In this regard, the Notifying Party submits  that  such  a
    granular approach is inappropriate due to the homogeneity of (i) legislative  and  regulatory  environments  at  national  level;  (ii)  the
    competitive conditions; and (iii) the type of services provided. Moreover, the Notifying Party  argues  that  the  Italian  market  for  the
    distribution of insurance products would be characterised by a chain of substitutability between the various retail spots located outside of
    the administrative borders of a given province similar to the one found by the Commission in Case COMP/M.5960 Crédit  Agricole  /  Cassa  di
    Risparmio della Spezia / Agences Intesa San Paolo with respect to the market for retail banking.

26) In any event, the exact geographic market definition for the distribution of insurance products can be left open, as  the  Transaction  does
    not raise any serious doubts as to its compatibility with the internal market under every market definition considered.

COMPETITIVE ASSESSMENT

27) While Allianz is active in the provision and distribution of both life and non-life insurance, the Target provides and distributes only non-
    life insurance in Italy.

28) Based on the data compiled by the Italian insurance regulator (Istituto per la Vigilanza sulle Assicurazioni), the Transaction gives rise to
    horizontally affected markets in the segment for the provision of travel insurance and, under the  segmentation  applied  by  the  AGCM,  in
    classes 12 (liability for ships) and 18 (assistance). If a local dimension of the market for  the  distribution  of  non-life  insurance  is
    ultimately retained, the Transaction also leads to horizontally affected markets  in  17  provinces  of  the  Italian  territory  and  to  a
    vertically affected market between the provision non-life insurance (and sub-segments thereof) and the distribution of non-life insurance in
    the province of Trieste.

     a) Provision of non-life insurance

    Non-coordinated effects

29) As regards the segment for the provision of travel insurance, the merged entity would have a market share of only  [20-30]%,  with  a  small
    increment of [0-5]%. The Transaction is unlikely to give rise to competition concerns because (i) post-Transaction, the merged  entity  will
    have a relatively modest market share; (ii) the increment brought about by the Transaction is limited; (iii) the segment is characterised by
    strong competitors such as UnipolSai ([20-30]%) and Generali ([10-20]%), as well as other non-negligible  players  such  as  Cattolica  ([5-
    10]%), Axa ([0-5]%) and Reale Mutua ([0-5]%); (iv) over the 2010-2013 period the Notifying Party’s and the Target’s market  shares  remained
    relatively stable, with a slight increase of [0-5] percentage points, respectively; and (v) even at CR3 level, i.e. the sum of the shares of
    the three main players, the degree of concentration of this segment would remain unchanged pre- and post-Transaction.

30) The same reasoning would apply mutatis mutandis to class 18 under the segmentation of  the  AGCM  (assistance),  because  according  to  the
    Notifying Party the segment for travel insurance and class 18 would identify the same market.

31) As regards class 12 (liability for ships), the merged entity wold have a market share of only [20-30]%, with a small  increment  of  [0-5]%.
    The Transaction is unlikely to give rise to competition concerns because (i) post-Transaction, the merged  entity  will  have  a  relatively
    modest market share; (ii) the increment brought about by  the  Transaction  is  limited;  (iii)  the  segment  is  characterised  by  strong
    competitors such as UnipolSai ([20-30]%) and Generali ([10-20]%), as well as other non-negligible players such as Reale Mutua ([5-10]%), Axa
    ([0-5]%) and Cattolica ([0-5]%); (iv) over the 2010-2013 period the Notifying Party’s and the Target’s  market  shares  decreased  by  [0-5]
    percentage points, respectively; and (v) even at CR3 level, the degree of concentration of this segment would remain unchanged pre- and post-
    Transaction.

32) Finally, the Transaction does not seem to remove a significant competitive constraint that previously  exerted  over  the  Notifying  Party.
    First, the number of players in the market would remain unchanged post-Transaction as UnipolSai will remain an active player. Second, in the
    event of a price increase by the merged entity, this latter would  risk  losing  customers  to  its  competitors,  which  are  not  capacity
    constrained. Third, the applicable legislation, i.e. the so-called  Bersani  Legislation,[17]  provides  that  customers  must  be  free  to
    terminate their policy at no cost on an annual basis, which significantly lowers switching costs. Fourth, the Target can hardly be  regarded
    as a maverick, as it has been - since 2002 - part of one of the biggest insurance groups in Italy  and  was  focused  on  traditional,  non-
    innovative distribution channels, i.e. agency as opposed to direct sales over the phone, internet and bancassurance agreements.

    Coordinated effects

33) One of the respondents to the market investigation raised concerns about possible coordinated effects stemming from the Transaction. Indeed,
    the Transaction increases the market share of Allianz in the market for the provision of non-life insurance (and segments thereof) in Italy,
    where only three players, i.e. UnipolSai, Allianz and Generali, currently control around [60-70]% of this market. Nevertheless,  competitive
    harm through coordinated effects is unlikely.

34) As noted at paragraph (32), the Transaction does not reduce the number of players in the market for the provision of non-life insurance (and
    segments thereof). Post-Transaction, this market will continue to feature more than six players, whose market shares and incentives are  far
    from being symmetric. In line with Paragraph 45 of the Horizontal Merger Guidelines, “it is easier to coordinate among a  few  players  then
    among many.” Therefore, the premise to any such theory of harm would be that coordination could take place  among  the  top  three  players.
    However, that is hardly merger-specific and in any event unlikely.

35) Allianz, UnipolSai and Generali already control the top three positions in the market for the provision of non-life insurance (and  segments
    thereof) in Italy. The Transaction does not alter these dynamics. Moreover, the impact of the Transaction is rather  limited  and  does  not
    justify a finding according to which - because of the transaction - coordination is made more likely than before. The market share increment
    brought about by the Transaction always remains below [0-5]% in all the segments of the market for the provision of non-life insurance.

36) In any event, even if the Transaction increased the likelihood of coordination among the three top players, it cannot be concluded that  any
    such attempt to coordinate would be successful. On the one hand, around [40-50]% of the market would remain in the hand of  non-coordinating
    firms, which could jeopardise the outcome of the expected coordination. On the other hand, incentives to  enter  in  any  such  coordination
    would not always be obvious. For instance, in the market for the provision of motor insurance the market leader UnipolSai would have -  even
    post-Transaction - a [10-20]-percentage point advantage over the merged entity and an even greater advantage over Generali.

37) Finally, the Notifying Party submits that coordination  is  highly  unlikely  because  (i) insurance  policies  are  an  example  of  widely
    differentiated products, for which effective coordination is hard to achieve; and  (ii)  recent  legislative  changes  aimed  at  increasing
    competition in the Italian non-life insurance market significantly facilitate customers’ switching and,  therefore,  customers’  ability  to
    disrupt any coordination.[18]

38) In the light of the foregoing, the Transaction is unlikely to give rise to competition concerns in the market for the provision of  non-life
    insurance.

     b) Distribution of insurance

39) At national level, the merged entity's market share would remain below [20-30]% under every market definition considered, i.e. in  both  the
    overall insurance distribution segment (regrouping life and non-life insurance distribution including and excluding direct  sales)  and  the
    segment for the distribution of non-life insurance products including and excluding direct sales. Therefore, the Transaction would not  give
    rise to any affected markets at this geographic level.

40) At provincial level, the merged entity's market share in the market for the distribution of non-life insurance products  would  exceed  [20-
    30]% in 17 provinces:[19] Trieste ([30-40]% with an increment of [0-5]%); Isernia ([20-30]% with an increment of [10-20]%); Benevento  ([20-
    30]% with an increment of [5-10]%); Novara ([20-30]% with a market increment of [5-10]%); Aosta ([20-30]% with  an  increment  of  [5-10]%);
    Crotone ([20-30]% with an increment of [0-5]%); Livorno ([20-30]% with an increment of [5-10]%); Olbia ([20-30]% with an  increment  of  [5-
    10]%); Bolzano ([20-30]% with an increment of [0-5]%); Medio Campidano ([20-30]% with an increment of [5-10]%); Pordenone ([20-30]% with  an
    increment of [0-5]%); Barletta ([20-30]% with an increment of [0-5]%); Cremona ([20-30]% with an increment  of  [5-10]%);  Foggia  ([20-30]%
    with an increment of [0-5]%); Brindisi ([20-30]% with an increment of [5-10]%); and Brescia ([20-30]% with an increment of [5-10]%).

41) However, no competition concerns are likely to arise, because (i) in most provinces the merged entity's market  share  would  be  relatively
    modest, being only slightly above [20-30]% (with the exception of Trieste, Isernia and Benevento where its market share would be around [30-
    40]%); (ii) in several provinces, among which Trieste where the merged entity achieves its highest market share, the increment brought about
    by the Transaction is small around or below [5-10]%; (iii) the merged entity will continue to face strong competitive pressure exerted by  a
    wide array of actual and potential competitors such as Generali, UnipolSai, Aviva, Vittoria, Sara,  Reale  Mutua,  Axa,  HDI,  Groupama  and
    others; and (iv) in all the provinces where the merged entity's market share exceeds [20-30]% except Trieste (namely, Isernia, Benevento and
    Novara) the market shares of Allianz and the Target have decreased over the period going from 2010 to 2012[20].

42) Finally, the Transaction would give rise to a hypothetical vertical relationship between the provision of non-life insurance  products  (and
    its sub-segments) and the market for the distribution of non-life insurance products in Trieste. However, given the absence of a significant
    degree of market power in the upstream markets for  the  provision  of  non-life  insurance  products  (below  or  around  [20-30]%),  input
    foreclosure of other downstream distributors as a result of the transaction is not likely. Conversely, considering (i) the  merged  entity's
    market shares in the downstream market for distribution of non-life insurance products in Trieste that is only slightly above  [30-40]%  and
    (ii) the limited impact of the Transaction (only [0-5]% increment in Trieste), customer foreclosure effects on upstream  providers  of  non-
    life insurance products are equally unlikely.

43) Therefore, the Commission concludes that the Transaction is not likely to give rise to any competition concerns on the market for  insurance
    distribution.

CONCLUSION

44) 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.

                                        For the Commission

                                        (signed)
                                        Joaquín ALMUNIA
                                        Vice-President
-----------------------
[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]   […].

[3]   Turnover calculated in accordance with Article 5 of the Merger Regulation.

[4]   Case No COMP/M.6957 IF P&C / Topdanmark, para. 15; Case COMP/M.6217 Baloise Holding / Nateus/Nateus Life, para. 10;  and  Case  COMP/M.6053
    CVC / Apollo / Brit Insurance, para. 12.

[5]   Case No COMP/M.6957 IF P&C / Topdanmark, para. 16; Case COMP/M.6217 Baloise Holding / Nateus/Nateus Life, para. 11;  and  Case  COMP/M.6053
    CVC / Apollo / Brit Insurance, para. 16.

[6]   Case No COMP/M.6957 IF P&C / Topdanmark, para. 17; and Case COMP/M.6053 CVC / Apollo/Brit Insurance, para. 16.

[7]   Case COMP/M.6521 Talanx International/Meiji Yasuda Life Insurance/Warta, para 19; Case COMP/M.4701 Generali/PPF Insurance  Business,  para.
    22; and Case COMP/M.4284 AXA/Winterthur, para. 14.

[8]   Case COMP/M.1712, Generali / INA, paras. 9 et seq.; and Case COMP/M.6649, Allianz / Insurance  Portfolio  and  Brokerage  Services  of  Gan
    Eurocourtage, para. 11.

[9]   Pursuant to Article 2 of the Italian Codice delle Assicurazioni Private (Legislative Decree No. 209/2005, as amended by Legislative  Decree
    No. 130/2012). See AGCM, Case C11524 Unipol Gruppo Finanziario / Unipol Assicurazioni-Premafin Fianziaria-Fondiaria SAI-Milano Assicurazioni
    of 19 June 2012; and Case C11936 Società Cattolica di Assicurazione / FATA Assicurazioni Danni of 5 March 2014.

[10]  Case No COMP/M.6957 IF P&C / Topdanmark, paras. 35-37; Case No COMP/M.6053 CVC / Apollo/ Brit Insurance, paras. 19  and  20;  and  Case  No
    COMP/M.4284 Axa / Winterthur, para. 15.

[11]  Case No COMP/M.6957 IF P&C / Topdanmark, para.  23;  Case  COMP/M.6649  Allianz  /  Insurance  portfolio  and  Brokerage  services  of  Gan
    Eurocourtage, para. 15.

[12]  Case No COMP/M.6957 IF P&C / Topdanmark, paras. 24, 27 and 29; Case No COMP/M.1307 Marsh & McLennon / Sedgwick, para. 9.

[13]  Case No COMP/M.6957 IF P&C / Topdanmark, para. 30; Case COMP/M.6521 Talanx International / Meiji Yasuda Life Insurance / Warta,  para.  56;
    COMP/M.6053 CVC / Apollo / Brit Insurance, para. 17.

[14]  Case No COMP/M.6957 IF P&C / Topdanmark, para. 35; and Case No COMP/M.6053 CVC/Apollo/Brit Insurance, para. 21.

[15]  Case COMP/M.5057 Aviva / UBI Vita, paras. 11 and 18; and Case COMP/M.2768 Generali / Banca Intesa / JV, paras. 21 and 27.

[16]  AGCM, Case C11524 Unipol Gruppo Finanziario/Unipol Assicurazioni-Premafin Fianziaria-Fonsiaria SAI-Milano Assicurazioni, paras. 54, 55  and
    75. See also AGCM, Case C9557 Cattolica Previdenza in azienda/Ramo d’azienda Eurizon Vita; and AGCM, Case C8027 Banca Intesa/San Paolo  IMI,
    para. 140 (the latter two cases with reference to the distribution of life insurance).

[17]  Law decree n. 223/2006, converted into law by Law n. 248/2006 and Law Decree n. 7/2007, converted into law by Law n. 40/2007.

[18]  For instance, customers’ mobility in the motor liability insurance sector will be further facilitated  by  Article  34  of  Law  Decree  n.
    1/2012 (currently under implementation by virtue of a draft IVASS  regulation)  intermediaries  must  inform  the  customer,  in  a  proper,
    transparent and exhaustive manner, of the fee and other contractual terms offered by  at  least  three  different  insurance  companies  not
    belonging to the same groups before they can stipulate a policy.

[19]  Data regarding the market for the distribution of non-life insurance products at provincial level include direct  sales.  However,  to  the
    best knowledge and belief of Allianz, those data also constitute a good proxy of a hypothetical market  for  the  distribution  of  non-life
    insurance products excluding direct sales.

[20]  While not in the position to provide precise market  shares  for  2013,  the  parties  confirmed  that  the  market  shares  for  2012  are
    representative for 2013 as well.