CELEX: 31994M0512
Language: en
Date: 1994-11-07 00:00:00
Title: COMMISSION DECISION of 07/11/1994 declaring a concentration to be compatible with the common market (Case No IV/M.512 - UAP / Provincial) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31994M0512

COMMISSION DECISION of 07/11/1994 declaring a concentration to be compatible with the common market (Case No IV/M.512 - UAP / Provincial) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 322 , 19/11/1994 P. 0005

 COMMISSION  DECISION of 07/11/1994 declaring a concentration to be compatible with the common market (Case No IV/M.512  - UAP  / Provincial) according to Council Regulation (EEC)  No 4064/89  (Only the English text is authentic).  The  paper version of the decision is available through  the sales offices of the Office of Official Publications of  the European Communities PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(b) DECISION To the notifying party Dear Sirs, Subject :<ind> Case No IV/M.512  UAP/Provincial <ind> <ind> Notification of 30.09.1994 pursuant to Article 4 of Council Regulation No 4064/89 1.<ind>  The  above  mentioned  notification  concerns   the agreementsigned  on  29th September 1994  whereby  Rockleigh Limited,  a  wholly owned subsidiary of the insurance  Group UAP, acquires the entire issued share capital of a number of businesses   of   the   insurance  and  financial   services Provincial Group.  2.<ind>   After   examination  of  the   notification,   the Commission  has concluded that the notified operation  falls within  the  scope of application of Council  Regulation  No 4064/89  and  does  not  raise  serious  doubts  as  to  its compatibility   with  the  common  market   and   with   the functioning of the EEA Agreement. I.<ind> THE PARTIES AND THE OPERATION 3.<ind>  <ind>  Compagnie UAP (UAP) is  a  French  insurance company with worlwide operataions. It is particularly strong in  Europe.  It  is  also engaged in banking  and  financial services,  in  particular through its  wholly  owned  French subsidiary  banque Worms and through the Belgian bank  Ippa. The  principal  activities of Provincial Group  are  nonlife insurance,   mortgage   finance  and  management   services, principally in the United Kingdom although it has some minor activities in Africa, Asia and Australasia. 4.<ind>  The business being acquired form substantially  the whole  of  the  activities of Provincial  Group.  These  are Provincial  Insurance  plc, Provincial Management  Services, Exeter Trust (Holdings) Limited, Provincial Leasing Co.  Ltd and certain properties of Sand Aire Properties Limited. Most of the worldwide turnover of the Provincial Group comes from its nonlife insurance activities. II.<ind> CONCENTRATION  5.<ind>  The  notified operation constitutes a concentration within the meaning of Article 3(1)b of the Regulation. III.<ind> COMMUNITY DIMENSION 6.<ind> The undertakings concerned have a combined aggregate worldwide turnover in excess of 5.000 million ECU. Both  UAP and Provincial Group have a Communitywide turnover in excess of 250 million ECU but do not achieve more than twothirds of their  aggregate Communitywide turnover within one  and  the same  Member State. The notified operation therefore  has  a Community dimension. IV.<ind> COMPATIBILITY WITH THE COMMON MARKET A.<ind> THE RELEVANT PRODUCT AND GEOGRAPHICAL MARKET 7.<ind>   Traditionally  the  Commission  has  distinguished between  life  insurance, general insurance and reinsurance. Reinsurance  constitutes a separate market  because  of  its purpose  of  spreading  risk between insurers.  It  is  more specialised and conducted between insurers and reinsurers on an  international basis because of the need to  pool  risks. The  regulatory framework is also less stringent. This gives rise to different conditions of competition compared to life and general insurance. 8.<ind>  On the demand side, life and general insurance  can be  divided  into  as  many product  markets  as  there  are insurances   covering  different  kinds   of   risk.   Their characteristics,  premiums  and purposes  are  distinct  and there  is  typically no substitutability  for  the  consumer between the different risk insured. Nevertheless it  can  be left open in the present case whether each specific type  of life  and  nonlife insurance constitutes a separate  product market   because,  even  on  the  basis  of  the   narrowest definition, the operation does not raise serious  doubts  as to its compatibility with the common market. 9.<ind> Although insurance markets are becoming more open to intracommunity competition as a result of current and future measures  to  facilitate crossborder  selling,  geographical markets seem at present to be mainly national in view of the established   market  structures,  the  need  for   adequate distribution channels, fiscal constraints in some cases  and differing national systems of regulatory supervision. B.<ind> COMPETITIVE ASSESSMENT 10.<ind> The only current area of overlap in the business of UAP  and  Provincial Group is non life insurance in the  UK. Neither Provincial Group nor any of its subsidiaries carries on life insurance. Provincial Group is the UK's 13th largest nonlife  insurance  company and it  has  approximately  [  ] (business  secret  deleted, less than  5%)  of  the  nonlife business  in  the  UK.  UAP currently  has  minimal  nonlife insurance activities in the UK. Even though Provincial Group is  present to a minimal extent in the banking and financial services  business, its activities do not overlap  with  the UAP's. Reinsurance activities of Provincial Group are to  be considered negligible. The new entity will remain exposed to the  competition of other strong operators well  established in  the  United Kingdom such as GeneralAccident,  Commercial Union Royal, Sun Alliance, etc. Given the degree of existing competition and the low barriers to entry to this  business, the merged entity will not have power to dominate the market or act independently of competitors and consumers. 11.<ind>  The  proposed  concentration  will  therefore  not create  or  strengthen a dominant position as  a  result  of which effective competition will be significantly impeded in the common market or in a substantial part of it. V.<ind> ANCILLARY RESTRAINTS 12.<ind>  The notifying parties have requested that  certain provisions  be considered as restrictions ancillary  to  the concentration. 13.<ind> First, there are provisions relating to the  period between the date of the agreement and the completion of  the transaction  (Clause 8 and Schedule 7). During  that  period Provincial Group will not conduct its business except in the ordinary   course  and  will  not  enter  into  transactions inconsistent with the merger without the consent of UAP. 14.<ind>  Secondly,  Provincial  Group  agrees  (Clause   9, Restrictions on Seller's business activities)   on  its  own behalf  and  on behalf of its present or future subsidiaries whilst they are members of the Group: (i)<ind> for a period of five years from completion, not  to compete with the acquired business; (ii)<ind>  not  to  disclose  or use  confidential  business information whilst such information remains confidential; (iii)<ind>  not to use certain names, logos, designs,  marks and trading styles; (iv)<ind> not to solicit customers or employees for a period of two years after completion;  (v)<ind>  not  to  hold  itself out  as  being  in  any  way associated with any member of the Acquired Business. 15.<ind> Thirdly,  Provincial Group agrees (Clause 15)  that for  a  certain  period after completion it  will  not  make distributions above a certain amount to its shareholders  or redeem  or  reduce its share capital, rearrange, consolidate or  reconstruct its corporate structure or carry out certain other activities which may reduce its asset value. 16.<ind>  Protection  by  law of  a  general  term  such  as "Provincial", which forms only part of the name  of  any  of the companies concerned and is in common use among insurers, is  much more limited. An indefinite restriction on the  use of  such  a name exceeds what is necessary to guarantee  the value  of  the  assets  transferred and  can  be  considered ancillary  to the concentration for a period of  five  years only. To the extent to which as the other provisions set out above  constitute  restrictions  on  competition,  they  are necessary to guarantee the transfer to UAP of the full value of the assets purchased or are otherwise directly related to and  necessary  for  the  successful implementation  of  the concentration. They can therefore be treated as ancillary to the concentration. VI.<ind> CONCLUSION 17.<ind>   For   the   foregoing   reasons,   the   proposed concentration  does  not  raise serious  doubts  as  to  its compatibility   with  the  common  market   and   with   the functioning of the EEA Agreement. For  the  above reasons, the Commission has decided  not  to oppose  the  notified operation and to declare it compatible with  the common market and with the functioning of the  EEA Agreement.  This  decision  is  adopted  in  application  of Article 6(1)(b) of Council Regulation No 4064/89. <tab> For the Commission