CELEX: 51989PC0641
Language: en
Date: 1989-12-18
Title: PROPOSAL FOR A COUNCIL REGULATION ( EEC ) ON THE APPLICATION OF ARTICLE 85 ( 3 ) OF THE TREATY TO CERTAIN CATEGORIES OF AGREEMENTS, DECISIONS AND CONCERTED PRACTICES IN THE INSURANCE SECTOR

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                 C0MC89) 641 final
                                                 Brussels, 18 December 1989
                           Proposal for a
                      COUNCIL REGULATION (EEC)
   on the application of Article 85(3) of the Treaty to certain
         categories of agreements, decisions and concerted
                 practices in the insurance sector
                   (presented by the Commission)
 ---pagebreak---                                ëxp ) snatory^Vjgcio^andum
    Reasons for the adoption of a regulation
     In  Its   judgment   of  27   January     1987   (German    Fife     insuranca,    Csse
    45/85)C' the Court of Justice stated              that the    Insurance sector       was
    fully subject     to Articles 35 and 86 ana to Regulation                 No   17, thus
    clearly rejecting the view, which at times had been expressed                     in the
    past, that the prohibition of Article 85(1) was not applicable to the
     insurance sector until an implementing regulation based on Article 87
    paragraph 2(c) had been adopted.
    Pursuant    to   discussions      between    the   Commission       and   the    "Comité
    Européen des Assurances", most insurers and their associations decided
    to   notify   their   agreements     and   recommendations.        Approximately     300
    notifications have been received so far by the Commission; this number
    may be expected to increase In the near future.
    An examination of      these notifications has shown            that only     a few of
    them remain outside the scope of application of Article 85(1), either
    because they are to be regarded as neutral with respect to competition
    law   (for   Instance   certain    codes   of   conduct    for    the   prevention    of
    certain forms of unfair competition) or because they are covered by
    the Commission's Notices of July 1968 concerning agreements, decisions
    and    concerted    practices      In   the    field    of    cooperation       between
                   2
    enterprises^ ^    or   of  September     1986 concerning       agreements     of   minor
                   3
    importance.< ) The other        notifications concern        agreements, decisions
    and concerted practices which faii within the scope of application of
    Article 35(1). They consist to a large extent of typical agreements or
    standardised terms of business used regularly and in large numbers by
    Insurance    companies when      concluding    Insurance    contracts with        policy
    holders or as a basis for cooperation with other insurance companies.
(1) (1987) ECR 405, 447.
(2) 0J C 75, 297.1968, p. 3.
(3) 0J C 231 , 12.9.1986, p. 2
                                                                                             2.
 ---pagebreak---                                             - 2
     In view of the quantity of notifications which poses serious problems
    regarding     the    Individual     treatment    of   each   case,    the  Commission
    envisages     a general     solution     in the    form  of   group   exemption.   The
    adoption of such group exemption would have the advantage of providing
    for   a   legal    framework     which    would   leave   the   Insurance   companies
    concerned a sufficient degree of flexibility regarding the drafting of
    their contracts. Moreover, such exemption would give the parties the
    benefit    of   the   highest    possible    degree   of   legal   security,   in the
    present case, the material prerequisites for the establishment of group
    exemptions     are   found    to   exist.' The    notifications     received  by   the
    Commission     show   the   existence     of  a number    of   frequently   occurring
    groups of agreements and concerted practices defined on the basis of
    abstract criteria, which are eligible for a general exemption from the
    prohibition of cartels.
I I. Orientations with respect to the future contents of the envisaged group
    exempt Ion
    The Commission proposes to adopt a group exemption once it has, through
    the   treatment    of   individual     cases, gained     sufficient    experience   to
    comprehensively assess the relevant restrictions of competition under
    Article 85(1) and (3).
    The  Commission's      practice     has already     led  to a clarification of a
    number of     Important questions,        in Its decisions "Nuovo Cegam"(4> and
    "Fire   Insurance",<5) the Commission           clearly expressed      its view that
    cooperation between        Indemnity     Insurers   In which    loss statistics are
    Jointly   analysed     and   In which common       risk premium    tariffs based on
    common accident statistics, excluding any loading                Instruments such as
    administrative costs, Intermediation costs and profits (pure premiums)
    are elaborated and applied, may be acceptable. However, such would In
(4) OJ   L   99,    11.4.1984,     p.    29;   14th   Report    on   Competition   Policy
    (1984), point 76.
(5) OJ   L   35,    7.2.1985,     p.    20;    14th   Peport   on    Competition    Policy
    (1984), point 75.
                                                                                           3
 ---pagebreak---      principle not be the cas** where the cooperation lad to the elaboration
     of commercial      premium tariffs (I.e. the premiums actually charged to
     policy holders comprising the above-mentioned loading               instruments).i6^
     This position has been confirmed by the Court of Justice in the above-
     mentioned "German Fire insurance" c a s e . ^          In Its decision "Protection
                                8
     and indemnity Ciubs"^ ^ the Commission considered agreements on mutual
      insurance   to be eligible for exemption           under   certain   circumstances.
     Moreover,     the    Commission     will    soon   adopt   two   further     exemption
     decisions      concerning       respectively      a    reinsurance      pooi^9^    and
                                                                         lQ
     cooperation in the field of Jncustriai fire Insurance.( )
     The Commission      Intends to deal with additional        Individual cases by way
     of    formal     decision,     or    administrative      'comfort'     letter    after
     publication of       the main contents of the agreements. With a view to
     preparing this programme, the Commission has undertaken an examination
     and evaluation of the pending notifications which permits the following
     conclusions     to be drawn      regarding    the contents of     the    future group
     exempt ion.
     It   Is proposed      that   this cover     types of    agreements, decisions      and
     concerted practices concerning:
     - the elaboration and application of common risk premium tariffs based
        purely  on    collectively     ascertained     statistics   or   loss    experience
        and/or of standard policy conditions;
     - cooperation       In   the   field    of   co-insurance    and   reinsurance.     In
        particular in the forms of groups and pools;
     - cooperation In respect of claims settlement procedures;
     - cooperation in respect of testing and acceptance of security devices;
     - cooperation in respect of registers of and Information on aggravated
        risks.
(6) See also Notice pursuant           to Article     19(3) of Council      Regulation   No
     17/62, oj C 259, 12.10.1989, p. 3 "Concordato ItaMano Incendio".
(7) See reference No 1.
(8) OJ    L  376,    31.12.1985,      p.   2;   15th   Report   on   Competition     Policy
     (1985), point 69.
(9) Notice pursuant        to Article    19(3) of Council        ^ulation No 17/62, OJ
     C 203, 8.8.1989, p. 2 "Teko"•
   1
(10 » See reference No 6.
                                                                                            4
 ---pagebreak---                                         - 4-
Basically, the conditions under which such agreements could be exempted
are the fol lowing :
- Common risk premium tariffs basea purely on collectively ascertained
  statistics     or    ioss   experience     may    only   be   elaborated    If   they
  constitute      common    actuarial      calculations     based    on   joint    ioss
  statistics with the aim to provide a technical balance on which the
   insurance industry can operate, to the exclusion of any loadings for
   instance for     Intermedial les' commissions, administrative costs or
  profits. As the Court of Justice found in Its above-mentioned ruling,
  an exemption may in principle not be granted for commercial                   premium
  tariffs,    i.e.    tariffs    that    Include not     only   the  cover   of   costs
  Incurred   in relation to claims Insured, but also such supplementary
  loadings as described above. Such tariffs should furthermore only be
  exempted    if   they   are    established    as non-binding       recommendations,
  leaving the participants free to depart from them.
- Standard policy conditions, although positive in the sense that they
  permit   a comparison       of    the extent     of  coverage    and  prices,    thus
  contributing      towards    transparency     for   consumers,     should   only    be
  exempted     If    they   are      Issued   as    recommendations      leaving    the
  participating companies          free to depart      from   the standard    to meet
  Individual    customers'      needs. Furthermore,       standard    policy    clauses
  should   not    unduly    restrict     competition,     for   example   by   uniform
  recommendation       of   a     very    long    contractual      duration    without
  corresponding      economic    advantages,     thus unduly     preventing    policy-
  holders from seeking cover with competing companies, or by generally
  recommending standard conditions systematically excluding particular
  types of cover, (e.g. for natural catastrophes or nuclear accidents).
  This exemption cannot, and does not, affect Member States' right to
  enact and apply their own consumer              protection    legislation    In this
  area, provided this remains within the limits set by Community                 law.
 ---pagebreak--- Agreements, décrions al^c* ccrtfe,';1^ ;?i/ict Ices»             by which   inr^'cn-;:;;
companies cooperate to set tip co-Insurance or reinsurance (or mixed
fo-Insurance and reinsurance» arrangements, especially in the form of
pools or groups,       ,•.;*'• it positive consideration        in particular whera
they open the market for companies which otherwise cou id not eastiy
enter it a'one, due to limited earacity cr expertise, or if they lead
to   a  coverage    of      such    risks   the': «re   not    usually   covered     by
 individual companies.. Although such schemes may restrict competition
between the participating companies In the reinsurance and/or in the
direct   insurance field, they cou id be exempted under               the condition
that effective competition on the market Is guaranteed.
However, such agreements should not be exempted if there is a danger
of monopolization of the market or               if their    rules would enable a
participant to abuse           its economic power. Additionally, they should
not be construed In such a way as to make parties lose their autonomy
completely and they should not entirely prevent parties from seeking
reinsurance   cover     or      participating    In a   co-Insurance     arrangement
elsewhere.
Regarding arrangements on accelerated and simplified procedures for
the settlement of claims, especially              in the case of damages covered
by several   insurance contracts, such arrangements do not, as a rule,
restrict competition. Nevertheless, they should not be applied                    in a
way detrimental to the interests of policy-holders.
Cooperation arrangements           In the field of testing and acceptance of
security devices have the advantage of facilitating underwriting by
eliminating the need for            individual examination       in each particular
case. They can be considered eligible for exemption if the approval
systems   themselves      are open       to all manufacturers or       fitters, are
based   on  purely    objective         and  Qualitative    criteria    and    do  not
dissuade    persons      from      submitting     to  this     system   by    way   of
disproportionate cost. Such arrangements are frequently accompanied
by recommendations aimed to ensure that the granting or refusal of
approval   is reflected         in some way     in the participating companies'
underwriting or rating po!ic»es. Recommençât lone, of this kind would
oniy   oe  acceptable         if   they   remain   pure;    nor-bindlng     terms   of
                                                             f               f
?efe?fne"5. iea'-'i^g l'^c c-^moar-•*?£. tree to d-^nrt ron those ;?ta".dards...
 ---pagebreak---    - cooperation     between   insurers    with   regard   to   registers   of  or
      information systems on aggravated risks can help to prevent           fraud.
     Although    in general   not   aimed    at a  restriction   of   competition,
     participation in such systems should not be obligatory and should not
     deprive companies of the possiblIIty to Insure such risks at their
     own evaluation. Further, they should not be operated to the detriment
     of the consumer.
   In the group exemption regulation, an 'opposition procedure' should be
   foreseen, so that companies may notify their arrangements in cases of
   doubt of legality of certain provisions with regard to the regulation.
   The benefit of this procedure should be accorded to provisions which
   have not been explicitly exempted but which nevertheless do not fall
   under the category of unacceptable or 'black' clauses.
III. Procedural aspects
     Before   the   Commission   may    establish   a  group   exemption,   it  Is
     necessary that the Council adopt an enabling regulation under Article
     87(2)(b) of the EEC Treaty, empowering the Commission            to declare,
     pursuant   to Article 85(3),      that Article 85(1) does not       apply  to
     certain categories of agreements, decisions and concerted practices
     In the insurance sector.
     The   proposal   annexed   hereto    takes  into  account   the   orientation
     described above. The draft Council regulation Is conceived along the
     lines of Regulations No 19/65 and No 2821/71.
                                                                                   ?
 ---pagebreak---                                         - 1 -
                                  Proposal for a
                            CQUNCII RFfiHIATTON (FFP
       on the application of Article 85(3) of the Treaty to certain
             categories of agreements, decisions and concerted
                       practices In the insurance sector
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having   regard    to    the   Treaty    establishing    the   European     Economic
Community, and in particular Article 87 thereof,
Having regard to the proposal from the Commission,
Having regard to the Opinion of the European Parliament,
Having regard to the Opinion of the Economic and Social Committee,
1. Whereas Article 85(1) of the Treaty may, in accordance with Article
   85(3),   be   declared     inapplicable     to   categories     of    agreements,
   decisions    and   concerted     practices    which   fulfil    the    conditions
   contained in Article 85(3);
2. Whereas the provisions for the implementation of Article 85(3) must
   be adopted by way of regulation pursuant to Article 87;
3. Whereas cooperation between undertakings in the Insurance sector is,
   to a certain extent, desirable to ensure the proper functioning of
   this   sector   and   may   at   the   same  time   promote   the    Interest  of
   consumers;
4. Whereas exemptions      under Article 85       (3) cannot    themselves affect
   Community    and    national    provisions     promoting    the    Interests   of
   consumers in this sector;
5. Whereas agreements, decisions and concerted practices serving such
   aims may, insofar as they fall within the prohibition contained in
   Article    85(1),   be   exempted    therefrom    under   certain    conditions;
   whereas    this   applies    particularly    to   agreements,     decisions   and
   concerted practices relating to common risk premium                tariffs based
   purely on collectively ascertained statistics or loss experience,
   standard policy conditions,, common coverage of certain types of
                                                                                     ?
 ---pagebreak---    risks,   the   settlement      of    claims,   the   testing     and    acceptance    of
   security   devices, and       registers of and         Information on        aggravated
   rIsks;
6. Whereas   In view of the large number of notifications submitted in
   pursuance of     Council Regulation No 17,(1)a s last amended by the Act              of
   Accession of Spain and Portugal, it Is desirable that                     In ordc     to
   facilitate    the    task   of   the Commission        it should      be   enabled    to
   declare by way of regulation that the provisions of Article 85(1) do
   not  apply    to    certain     categories      of   agreements,       decisions     and
   concerted practices;
7. Whereas    It   should     be     laid    down    under    which     conditions      the
   Commission,     in    close   and      constant    liaison     with    the    competent
   authorities of the Member States, may exercise such powers;
8. Whereas   under    Article    6 of      Regulation   No    17 the Commission may
   provide that a decision taken             in accordance with Article 85(3) of
   the  Treaty    shall    apply     with    retroactive     effect;     whereas     It   Is
   desirable   that     the Commission        be empowered      to   issue    regulations
   whose provisions are to the like effect;
9. Whereas under Article 7 of Regulation No 17 agreements, decisions
   and  concerted      practices      may, by    decision     of   the    Commission, be
   exempted   from prohibition,          In particular     If they are modified          In
   such  manner    that    Article     85(3) applies       to   them;    whereas     It  is
   desirable that the Commission be enabled to grant by regulation like
   exemption to such agreements, decisions and concerted practices if
   they  are modified       In such manner         as  to   fall    within    a   category
   defined in an exempting regulation;
10. Whereas   the possibility         cannot    be excluded      that,    in a specific
    case, the conditions set out in Article 85(3) may not be fulfil led;
    whereas the Commission must have power to regulate such a case in
    pursuance of Regulation No 17 by way of decision having effect for
    the future,
HAS ADOPTED THIS REGULATION :
(1) 0J No 13 of 21.2.1962, p. 204/62.
 ---pagebreak---                                   Article 1
1. Without   prejudice   to  the   application     of   Regulation    No   17  the
   Commission may, by Regulation and In accordance with Article 85(3)
   of   the  Treaty,  declare   that   Article    85(1) shall     not    apply  to
   categories    of   agreements    between     undertakings,     decisions     of
   associations    of   undertakings    and    concerted     practices     In  the
    insurance sector which have as their object cooperation with respect
   to :
   (a) common    risk  premium   tariffs     based    purely   on   collectively
        ascertained statistics or loss experience;
   (b) common standard policy conditions;
   (c) the common coverage of certain types of risks;
   (d) the settlement of claims-,
   (e) the testing and acceptance of security devices;
   (f) registers of and information on aggravated risks.
2. Such regulation shall define the categories of agreements, decisions
   and concerted practices to which        It applies and shall specify in
   particular :
   (a) the restrictions or clauses which may, or may not, appear In the
        agreements, decisions and concerted practices;
   (b) the clauses which must be contained In the agreements, decisions
        and concerted practices or the other conditions which must be
        satIsfled.
                                                                                   o
 ---pagebreak---                                         - 4 -
                                      Article 2
Any Regulation pursuant to Article 1 shall be made for a specified
perlod.
  It may be repealed or amended where circumstances have changed with
respect to any of the facts which were basic to Its being made; In
such     case,   a   period   shall   be    fixed   for  modification  of   the
agreements, decisions and concerted practices to which the earlier
Régulât ion applles.
                                      Article 3
A Regulation pursuant to Article 1 may provide that it shall apply with
retroactive effect to agreements, decisions and concerted practices to
which, at the date of entry Into force of that Regulation, a decision
issued with retroactive effect In pursuance of Article 6 of Regulation
No 17 would have applied.
                                      Article 4
1. A Regulation pursuant to Article 1 may provide that the prohibition
     contained In Article 85(1)        shall not a p p l y , for   such
     period   as   shall   be   fixed   by    that   Regulation,  to  agreements,
     decisions and concerned practices already In existence on 13 March
i    1962 which do not satisfy the conditions of Article 85(3), where' :
    -within six months from the entry             into force of the Regulation,
       they  are    so modified     as   to   satisfy   the  said  conditions   In
       accordance with the provisions of the Regulation; and
    - the modifications are brought           to the notice of the Commission
       within the time limit fixed by the Regulation.
                                                                                      $
                                                                                   J<
 ---pagebreak---                                       — *  ,„.
   The provisions of the first          subparagraph shall apply In the same
   way to agreements, decisions and concerted practices existing at the
   date  of   accession   of   new Member       States  to which    Article   85(1)
   applies   by   virtue   of   accession      and  which   do  not   satisfy   the
   conditions of Article 85(3).
2. Paragraph    1 shall    apply   to agreements,      decisions    and   concerted
   practices   which   had   to be notified        before   1 February    1963,  in
   accordance with Article 5 of Regulation No 17, only where they have
   been so notified before that date.
   As regards agreements, decisions and concerted practices                existing
   at the date of accession of new Member States to which Article 85(1)
   applies by virtue of accession and which had to be notified within
   six months from the date of accession in accordance with Articles 5
   and 25 of Regulation No 17, paragraph 1 shall not apply unless they
   have been so notified within this period.
3. The benefit of the provisions laid down pursuant to paragraph 1 may
   not be claimed in actions pending at the date of entry into force of
   a regulation adopted pursuant to Article 1; neither may it be relied
   on as grounds for claims for damages against third parties.
                                    Article 5
Before  making   a  regulation,     the   Commission     shall  publish    a  draft
thereof  to enable all persons and organizations concerned               to submit
their comments within such time limit, being not less than one month,
as the Commission shall fix.
                                                                                    i
 ---pagebreak---                                    - 6 -
                                 Article 6
1. The Commission shall consult the Advisory Committee on Restrictive
   Practices and Monopolies :
    (a) before publishing a draft regulation;
    (b) before adopting a regulation.
2. Except where otherwise provided by this Regulation, paragraphs 5 and
   6 of Article 10 of Regulation No 17, relating to consultation with
   the   Advisory  Committee,   shall    apply;   joint   meetings   with  the
   Commission shall however take place not earlier than one month after
   dispatch of the notice convening them.
                                 Article 7
Where the Commission, either on Its own Initiative or at the request of
a Member State or of natural or       legal persons claiming a      legitimate
Interest, finds that   In any particular case agreements, decisions and
concerted practices to which a regulation made pursuant to Article 1 of
this Regulation   applies have nevertheless certain effects which          are
Incompatible with   the conditions    laid down    in Article   85(3),
it may withdraw     the benefit    of application        of that    regulation
and take a decision in accordance with Article 6 and 8 of Regulation No
17, without   any  notification  under    4(1) of   Regulation   No  17 being
required.
This   Regulation  shall   be  binding     in  its   entirety   and   directly
applicable in all Member States.
Done at Brussels,                               For the Council
                                                                               /3
 ---pagebreak---  ---pagebreak---                                                                      ISSN 02^4-1475
                                                              COM(89) 641 final
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