CELEX: 32019M9398
Language: en
Date: 2019-08-13 00:00:00
Title: Commission Decision of 13/08/2019 declaring a concentration to be compatible with the common market (Case No COMP/M.9398 - Centerbridge Partners, L.P. / AmTrust Corporate Member Limited) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 13.08.2019
                                                                C(2019) 6118 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                                                                 information omitted has been replaced by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.
                                                                To the notifying party
Subject:            Case M.9398 – Centerbridge Partners/Amtrust Corporate Member
                    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 9.07.2019, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation (the “Transaction”),
          by which Centerbridge Partners, L.P. (“Centerbridge”, USA or the “Notifying
          Party”) acquires sole control within the meaning of Article 3(1)(b) of the Merger
          Regulation of AmTrust Corporate Member Limited and certain other business assets
          together comprising the AmTrust at Lloyds business (“AmTrust”, UK)3.
(2)       Centerbridge and AmTrust are referred to below as the “Parties”.
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    Publication in the Official Journal of the European Union No C 239, 16.07.2019, p. 8.
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--- 1.       THE PARTIES
(3)      Centerbridge is an investment management firm based in the USA focused on
         private equity and distressed investment opportunities. Amongst other businesses,
         Centerbridge solely controls Canopius AG (“Canopius”, Switzerland), which
         provides non-life insurance and reinsurance services.
(4)      AmTrust provides insurance solutions for a wide range of risks in the UK and
         around the world. It provides non-life insurance and reinsurance services.
2.       THE OPERATION AND THE CONCENTRATION
(5)      Pursuant to a Framework Agreement entered into on 18 April 2019 between a
         subsidiary ultimately wholly owned by funds managed by Centerbridge and
         AmTrust International Limited (the “Seller”), Centerbridge will acquire 100% of the
         shares and assets constituting AmTrust.4
(6)      As a result of the Transaction, Centerbridge will obtain sole control over AmTrust
         within the meaning of Article 3(1)(b) of the Merger Regulation.
3.       EU DIMENSION
(7)      The undertakings concerned have a combined aggregate world-wide turnover of
         more than EUR 5 000 million (Centerbridge: EUR […], AmTrust: EUR […])5. Each
         of them has an EU-wide turnover in excess of EUR 250 million (Centerbridge: EUR
         […], AmTrust: EUR […]). They do not both achieve more than two-thirds of their
         aggregate EU-wide turnover within one and the same Member State. The notified
         operation therefore has an EU dimension.
4.       MARKET DEFINITION
(8)      Both Parties are active in non-life insurance in the EEA in the following sub-
         segments: (i) credit and suretyship, (ii) property, (iii) liability, (iv) accident and
         sickness, (v) motor, and (vi) marine, aviation and transport (“MAT”). The Parties are
         also active in the supply of non-life reinsurance services worldwide (including in the
         EEA). Neither Party provides life insurance or reinsurance services.
(9)      The Notifying Party submits that all of the relevant product and geographic market
         definitions can be left open.
4   AmTrust includes certain businesses over which Centerbridge is acquiring control on a transitory basis
    under the Framework Agreement but which will be ceded back to the Seller immediately following
    completion. In addition, after completion of the Transaction, the Seller will acquire a minority, non-
    controlling shareholding in the Centerbridge subsidiary that is acquiring AmTrust (this does not result in
    joint control).
5   Turnover calculated in accordance with Article 5 of the Merger Regulation.
                                                          2
 ---pagebreak--- (10)    In previous decisions, the Commission has distinguished between three broad
        categories of insurance products: life insurance, non-life insurance and reinsurance.6
4.1.    Non-life insurance
(11)    The Commission has noted in previous decisions that non-life insurance products
        might be subdivided into as many product markets as there are different kinds of risk
        covered in light of the differences in their characteristics and purpose and the lack of
        substitutability from a customer’s perspective.7 More specifically, the Commission
        distinguished the following non-life insurance segments: (i) accident and sickness,
        (ii) motor vehicle, (iii) property, (iv) liability, (v) MAT, (vi) credit and suretyship,
        and (vii) travel insurance. However, the Commission also noted that there were
        some indications of a potential degree of supply-side substitutability between some
        insurance products. The Commission ultimately left open the precise product market
        definition for non-life insurance products.
(12)    In previous decisions, the Commission considered that the relevant geographic
        market for non-life insurance products and its sub-segments is likely to be national
        in scope with the exception of MAT insurance, which the Commission considered as
        likely to be wider than national.8 However, the Commission has ultimately left open
        the precise geographic market definition.
(13)    In the present case, the exact product and geographic market definitions can be left
        open, as the Transaction does not significantly impede effective competition
        irrespective of the alternative market definitions considered.
4.2.    Reinsurance
(14)    In previous decisions, the Commission left open whether a distinction should be
        made between reinsurance for the life and non-life insurance segments and whether,
        within the non-life segment, further segmentation according to the class of risk
        should be considered.9
(15)    The Commission has previously considered the market for reinsurance to be global
        due to the need to pool risks on a worldwide basis.10
(16)    In any event, in the present case, the exact product and geographic market definitions
        can be left open, as the Transaction does not significantly impede effective
        competition irrespective of the alternative market definitions considered.
6   Case COMP/M.6521 – Talanx International/Meiji Yasuda Life Insurance/Warta, decision of 4 April 2012
    and Case COMP/M.9056 – Generali CEE/AS, decision of 10 December 2018.
7   Case COMP/M.6521 – Talanx International/Meiji Yasuda Life Insurance/Warta, decision of 4 April 2012
    and Case COMP/M.9056 – Generali CEE/AS, decision of 10 December 2018.
8   Case COMP/M.9056 – Generali CEE/AS, decision of 10 December 2018 and Case COMP/M.6217
    Baloise Holding/Nateus/Nateus Life, decision of 3 August 2011.
9   Case COMP/M.8257 NN Group/Delta Lloyd, decision of 7 April 2017 and Case COMP/M.6053
    CVC/Apollo/Brit Insurance, decision of 19 January 2011.
10 Case COMP/M.8257 NN Group/Delta Lloyd, decision of 7 April 2017 and Case COMP/M.6848
    Aegon/Santander/Santander Vida/Santander Generales, decision of 29 April 2013.
                                                        3
 ---pagebreak--- 5.      COMPETITIVE ASSESSMENT
5.1.    Horizontal overlaps in non-life insurance
(17)    Both Parties supply non-life insurance in the EEA. The Notifying Party estimates
        that their combined market shares in the supply of non-life insurance at national
        level are less than [0-5]% in each EEA Member State. According to the Notifying
        Party’s estimates, if non-life insurance is further segmented by policy type, the
        Parties’ combined market shares are less than [10-20]% in each EEA Member State,
        with the exception of MAT insurance in Norway.11
(18)    The Notifying Party argues that the Parties’ combined market share in the supply of
        MAT insurance in Norway is modest: [20-30]%. The increment from Canopius is
        small: [0-5]%. In 2018, Canopius’ revenues from MAT insurance in Norway were
        EUR […] (i.e. less than [0-5]% of its EEA-wide MAT insurance revenues) and
        AmTrust’s MAT insurance revenues in Norway were EUR […] (i.e. around [10-
        20]% of its EEA-wide MAT insurance revenues).
(19)    The Notifying Party submits that these estimates, prepared using Insurance Europe
        data, significantly overstate the Parties’ combined market share of MAT insurance in
        Norway, since the dataset used to calculate the total market size only includes
        premiums written by Norwegian insurance companies in Norway. Indeed the
        Notifying Party notes that MAT policies sold to Norwegian customers are typically
        ‘large risk’ (relating to off-shore platforms, tanker fleets, large fishing vessels) and
        held by large/multinational corporations. It argues that such risks are often
        contracted with insurers outside of Norway (for example by insurers on the Lloyds
        of London market) and consequently are not captured by the market size data.
(20)    The Notifying Party submits alternative market share estimates based on: (i) OECD
        data, (ii) data from the national statistical institute of Norway, (iii) data from Lloyd’s
        of London and (iv) data from Cefor, the Nordic Association of Marine Insurers. The
        Notifying Party argues that these estimates better reflect competitive conditions in
        the Norwegian MAT insurance market. All of these estimates show combined
        market shares in the supply of MAT insurance in Norway of less than [0-5]%.
(21)    The Notifying Party submits that the merged entity will continue be constrained in
        the supply of MAT insurance in Norway by large, international competitors such as
        Allianz, Axa, AIG, Swiss Re Corporate Solutions and QBE as well as a number of
        local players based in Norway.
(22)    Responses of MAT customers of the Parties in Norway confirmed that they also
        routinely consider international insurers to be alternative suppliers to the Parties. The
        respondents to the market investigation were of the opinion that the Transaction
        would not have any impact on the market for MAT insurance in Norway and that
        there will continue to be sufficient competition and choice on the market.
(23)    In view of the above, the Commission considers that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in the supply of non-
        life insurance, regardless of the market definition adopted.
11  To the extent that the supply of MAT insurance is defined as a national market – if it is defined as wider
    than national, the Parties’ combined market shares would be below [20-30]% as well.
                                                         4
 ---pagebreak--- 5.2. Horizontal overlap in non-life reinsurance
(24) The Parties overlap in the global market for non-life reinsurance. According to the
     Notifying Party’s estimates, their combined market share in the supply of non-life
     reinsurance worldwide is [0-5]% or less and their combined market shares on any
     plausible segmentation, for example by risk type, are less than [20-30]%.
(25) Therefore, the Commission considers that the Transaction does not raise serious
     doubts as to its compatibility with the internal market as regards the supply of non-
     life reinsurance, regardless of the market definition adopted.
5.3. Vertical relationships between reinsurance (upstream) and non-life insurance
     (downstream)
(26) Both Parties are active in the upstream supply of reinsurance services and the
     downstream market for non-life insurance. However, these markets are not
     vertically affected. Upstream, the Notifying Party estimates that the Parties’
     combined market share in the supply of non-life reinsurance worldwide is de
     minimis (c. [0-5]%) and, as discussed in section 5.1.2 above, is less than [20-30]%
     on any plausible segmentation. Downstream, the Notifying Party estimates that their
     combined market shares do not exceed [30-40]% in any EEA Member State.
(27) Therefore, 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 the supply of reinsurance and the downstream
     market for non-life insurance.
6.   CONCLUSION
(28) For the above reasons, the European Commission has decided not to oppose the
     notified operation and to declare it compatible with the internal market and with the
     EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the
     Merger Regulation and Article 57 of the EEA Agreement.
                                                    For the Commission
                                                    (Signed)
                                                    Margrethe VESTAGER
                                                    Member of the Commission
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