CELEX: 32019M9531
Language: en
Date: 2019-11-20 00:00:00
Title: Commission Decision of 20/11/2019 declaring a concentration to be compatible with the common market (Case No COMP/M.9531 - ASSICURAZIONI GENERALI / SEGURADORAS UNIDAS / ADVANCECARE) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 20.11.2019
                                                                C(2019) 8437 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                                                                 information omitted has been replaced by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.9531 – Assicurazioni Generali/Seguradoras
                    Unidas/AdvanceCare
                    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 16 October 2019, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which Assicurazioni
          Generali S.p.A. (“Generali”, Italy) intends to acquire sole control by way of
          purchase of shares of Seguradoras Unidas, S.A. (“Seguradoras Unidas”, Portugal)
          and AdvanceCare Gestão de Serviços de Saúde, S.A (“AdvanceCare”, Portugal) both
          currently controlled by investment funds managed by affiliates of Apollo
          Management, LP. (the “Apollo Group”, USA).3 Generali is designated hereinafter as
          the “Notifying Party” and, together with Seguradoras Unidas and AdvanceCare, 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 360, 24.10.2019, p. 33.
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
(2)      Generali is active in the insurance and financial sector, in Western, Central and
         Eastern Europe, as well as outside the EEA. In Portugal, Generali is active in non-
         life insurance, life insurance, and assistance services (in particular with the Europ
         Assistance brand).
(3)      Seguradoras Unidas is active in the insurance sector in Portugal, covering all main
         life and non-life risks. It is active with the Tranquilidade, Açoreana and LOGO
         brands.
(4)      AdvanceCare is active in health insurance management services, risk assessment and
         claims management in Portugal. It also provides health insurance management
         services in Portugal.
(5)      Both Seguradoras Unidas and AdvanceCare (together the “Targets”) are currently
         controlled by the Apollo Group via two investment funds, Calm Eagle Holdings
         S.à.r.l. and Calm Eagle Parent Holdings II S.à.r.l.
2.       THE OPERATION
(6)      On 18 July 2019, Generali signed a Sale and Purchase Agreement with Calm Eagle
         Holdings S.à.r.l. and Calm Eagle Parent Holdings II S.à.r.l., pursuant to which
         Generali will acquire 100% of the issued share capital of Seguradoras Unidas and
         Calm Eagle Portugal, Sociedade Unipessoal, Lda, a holding company that fully owns
         AdvanceCare.
3.       THE CONCENTRATION
(7)      The concentration concerns the acquisition by Generali of the entire issued share
         capital, and thus of sole control, of Seguradoras Unidas and AdvanceCare, within the
         meaning of Article 3(1)(b) of the EUMR, [CONFIDENTIAL].4
4.       EU DIMENSION
(8)      The undertakings concerned have a combined aggregate worldwide turnover of more
         than EUR 5 000 million (Generali: EUR 66 691 million; Seguradoras Unidas: EUR
         800 million; AdvanceCare: EUR [BUSINESS SECRET]). Each of Generali and
         Seguradoras Unidas has an EU-wide turnover in excess of EUR 250 million
         (Generali: EUR [BUSINESS SECRET]; Seguradoras Unidas: EUR [BUSINESS
         SECRET]). Seguradoras Unidas and AdvanceCare both achieve more than two-thirds
         of their respective EU-wide turnover in Portugal, but Generali does not. The notified
         operation therefore has an EU dimension.
4   Such operations are however irrelevant for the purposes of the assessment of the impact of the Transaction
    in the EEA.
                                                         2
 ---pagebreak--- 5.       COMPETITIVE ASSESSMENT
(9)      In the past, the Commission has considered three broad categories of insurance
         product markets: (i) life insurance, (ii) non-life insurance, and (iii) reinsurance.5
         Previous decisions of the Commission also consider assistance services (i.e. the
         provision of support to persons who encounter difficulties while travelling or away
         from their home) as distinct from the provision of non-life insurance products.6
(10)     The Parties’ activities overlap with respect to all these categories in Portugal, but
         affected markets only arise in relation to non-life insurance or services provided as
         input to non-life insurance, namely health insurance management services, as well as
         assistance services.7
5.1.     Non-life insurance
5.1.1. Previous decisional practice
(11)     As regards product market definition, the Commission’s consistent approach is to
         consider that non-life insurance can be divided into as many different product
         markets as there are types of risks to insure.
(12)     For the purposes of the present investigation, the Commission notes that precedents
         distinguish the following non-life insurance segments: (i) accident and sickness, (ii)
         motor vehicle,8 (iii) property, (iv) liability, (v) marine, aviation and transport
         (“MAT”), (vi) credit and suretyship and (vii) travel insurance. In certain decisions,
         the Commission also distinguished fire insurance, and legal assistance. This possible
         segmentation is based on the fact that the characteristics and purpose of the different
         types of insurance are distinct, and that there is typically no substitutability between
         different types of insurance from a customer’s perspective. The Commission also
         considered several alternative segmentations of the non-life insurance market,
         including based on the national insurance classification or between individual and
         group customers. The Commission ultimately left open the precise product market
         definition for non-life insurance products.9
(13)     As regards geographic market definition, in previous decisions, the Commission
         considered that the relevant market for non-life insurance products and its sub-
         segments is likely to be national in scope with the exception of certain insurance
5   Case COMP M.9056 – Generali CEE/AS, para. 10 and cases cited.
6   Case COMP M.8905 – AXA Group/Roland, para.7.
7   The Parties’ combined market share in life insurance in Portugal is below 2% overall and below 6% in any
    plausible sub-segments. In reinsurance, Seguradoras Unidas only provides in-house reinsurance for the
    activities of [BUSINESS SECRET]. Generali also provides mainly intra-group reinsurance coverage and
    participates in terrorism and pollution pools, set up and managed by other reinsurance providers.
    AdvanceCare is not active in reinsurance. The Parties’ combined market share in the global reinsurance
    market are significantly below 5%.
8   The Commission considered further segmenting the motor vehicle insurance market based on (i) third
    party liability (“TPL”) motor insurance, and (ii) non-TPL (or “Casco”) insurance. See Case
    COMP/M.6521, Talanx International/Meiji Yasuda Life Insurance/Warta, paras. 24 and following, Case
    COMP/M.4701, Generali/PPF Insurance Business, para. 24, and Case COMP/M.4284, AXA/Winterthur,
    para. 14. The Commission also considered segmenting the motor vehicle insurance market based on (i)
    large vehicle (e.g. trucks and buses) insurance, and (ii) automobile and/or small commercial vehicle
    insurance. See Case COMP/M.6521, Talanx International/Meiji Yasuda Life Insurance/Warta, paras. 24
    and following.
9   Case COMP M.9056 – Generali CEE/AS, para. 11-12 and cases cited.
                                                          3
 ---pagebreak---           risks, including MAT insurance and generally large risk insurance, which the
          Commission considered to be wider than national in scope.10
5.1.2. Notifying Party’s view
(14)      The Notifying Party submits that the top non-life insurers in Portugal are authorised
          to provide non-life insurance in essentially all insurance classes,11 and actually did
          generate gross written premiums (“GWP”) in all those classes in 2018. As a result,
          the competitive landscape is relatively homogeneous across all non-life insurance
          classes, which would support the definition of one non-life insurance market without
          sub-segments.
(15)      The Notifying Party however provided market share data for several market
          definitions corresponding to the non-life insurance classes defined in the relevant
          Portuguese law, namely the RJASR. The Notifying Party concludes that in any case
          no competition concerns arise as a result of the transaction in any sub-segment of the
          non-life insurance market in Portugal.
5.1.3. Commission’s assessment
(16)      For the purpose of the present decision, the exact product and geographic market
          definition for the provision of non-life insurance can be left open as the transaction
          does not raise serious doubts as to its compatibility with the internal market under
          any plausible market definition identified in paragraphs 12 to 14.
5.2.      Health insurance management services
5.2.1. Notifying Party’s view
(17)      According to the Notifying Party, health insurance management services consist in
          administrative and management services (such as claims management, health
          provider network negotiations, contracts maintenance and management, payment
          management and complaints handling) to insurance companies as well as managing
          access to a designated health network for health insurance policy holders and
          corporate entities.
(18)      These services can be provided by insurers in-house or be outsourced to a third
          party. The Notifying Party submits that in-house and third party provision of health
          insurance management services should be considered as part of the same product
          market, given that the two forms exert competitive pressure on each other.
          According to the Notifying Party, cost is the main factor for deciding whether to
          provide such services internally or to outsource them.
10  Case COMP M.9056 – Generali CEE/AS, para. 16 and cases cited.
11  The insurance classes are defined in the Legal Regime Governing the Access to and Exercise of Insurance
    and Reinsurance Activities (Regime Jurídico de Acesso e Exercício da Atividade Seguradora e
    Resseguradora, “RJASR”) contained in Annex I to Law No. 147/2015 which transposes Directive No.
    2009/138/EC (Solvency II) into Portuguese law. Those classes correspond to the sub-segments of the non-
    life insurance market identified in the Commission’s previous decisional practice. In particular, Article 12
    RJSAR covers (i) accident and sickness (Article 12(a) RJASR), (ii) motor vehicle (Article 12(b) RJASR),
    (iii) property (Article 12(e) RJASR), (iv) liability (Article 12(f) RJASR), (v) MAT (Articles 12(c)-(d)
    RJASR), (vi) credit and suretyship (Article 12(g) RJASR) and (vii) travel insurance (Article 8(r) RJASR).
                                                          4
 ---pagebreak--- (19)    In terms of geographic market, the Notifying Party submits that the market is
        national, given that health insurance management services are an input for the
        provision of health insurance products, which is a national market.12
5.2.2. Commission’s assessment
(20)    The Commission’s market investigation confirmed the scope of the product and
        geographic market definition.
(21)    The market investigation confirmed the Notifying Party’s claim that internal
        provision of health insurance management services exert a competitive constraint on
        third party providers as several large and vertically integrated insurers provide these
        services to other smaller insurers, in addition to providing them in-house for their
        own health insurance business.13
(22)    In any case, for the purpose of the present decision, the exact market definition for
        the provision of health insurance management services can be left open as the
        transaction does not raise serious doubts as to its compatibility with the internal
        market under any plausible market definition regardless of whether health insurance
        management services should include those services provided in-house or not.
5.3.    Assistance services
5.3.1. Previous decisional practice
(23)    In terms of product market definition, the Commission defined assistance services in
        its previous decisions as organizing assistance/support for customers,14 e.g. in the
        form of sending a car recovery vehicle or organizing repatriation of a policy
        holder.15 The Commission considered potential sub-segments for road assistance and
        travel assistance,16 and segmenting individual and corporate customers (such as
        insurance companies, leasing companies, car rental companies, or manufacturing
        companies).17
(24)    In terms of geographic market definition, the Commission considered assistance
        services to be national in scope in previous decisions.18
5.3.2. Notifying Party’s view
(25)    The Notifying Party refrains from taking a position as to whether assistance services
        in the form of an insurance belong to the same market as assistance services for a
        service fee, by noting that there are similarities indicating that they may belong to
        the same relevant market, but also differences that would support separate markets.
        From a supplier’s perspective, assistance provided in return for an insurance
        premium is an insurance activity, and is as such a regulated activity, subject in
        particular to the RJSAR, while assistance services provided for a fee are not. The
12  Case COMP M.9056 – Generali CEE/AS, para. 16 and cases cited.
13  Minutes of a call with a competitor.
14  Case COMP M.8905 – AXA Group/Roland, para.13ff and cases cited.
15  Case COMP M.4701 – Generali/PPF Insurance Business, para. 29.
16  Case COMP M.4701 – Generali/PPF Insurance Business, para. 30.
17  Case COMP M.8905 – AXA Group/Roland, para. 14.
18  Case COMP M.8905 – AXA Group/Roland, para. 25 and cases cited.
                                                   5
 ---pagebreak---         only relevant difference between both types of services from a customer’s
        perspective is that in insurance-based assistance services the customer pays an
        insurance premium (as opposed to a “pay per use” model when procuring assistance
        services for a fee). Hence, from a demand-side perspective the products are
        somewhat interchangeable. However, while the insurance-based assistance product
        is often sold in a bundle with other insurance products (e.g. in case of road side
        assistance, it can typically be sold together with motor vehicle insurance), the fee-
        based assistance service product is typically sold on a stand-alone basis.
(26)    The Notifying Party further considers that the putative market for assistance should
        include in-house provision of equivalent services by vertically integrated insurance
        companies, as these exert competitive pressure on third party providers. In addition,
        the direct provision of assistance insurance to end-customers should be considered as
        part of the same market as “assistance reinsurance” provided to insurers, which then
        bundle the assistance insurance with related insurance products and sell this bundle
        to end-customers.
(27)    The Notifying Party did not provide an opinion on the geographic dimension of the
        market but assumed it to be national in scope.
(28)    In any case, the Notifying Party argues that the market definition can be left open as
        no concerns arise under either market delineation.
5.3.3. Commission’s assessment
(29)    The Commission notes that fee-based assistance services are mostly sold to
        corporate customers while insurance-based assistance services are customarily
        bundled with related insurance products and sold to end-customers. However, at
        least in the Portuguese market, there seem to be overlaps in terms of customers with
        some procuring both assistance in the form of a service and in the form of an
        insurance.
(30)    In any case, for the purpose of the present decision, the exact market definition for
        the provision of assistance services can be left open as the transaction does not raise
        serious doubts as to its compatibility with the internal market under any plausible
        market definition, regardless of whether fee-based assistance services and insurance-
        based assistance services form part of the same product market.
6.      COMPETITIVE ASSESSMENT
(31)    Horizontally, the following markets are affected:19 (i) Accident insurance (a potential
        sub-segment of the accident and sickness non-life insurance market), (ii) Motor
        vehicle insurance (and potential sub-segments thereof), (iii) Goods in transit
        insurance (a potential sub-segment of the MAT non-life insurance market), and (iv)
        Assistance services.
19  See Commission Regulation (EC) No 802/2004 of 21 April 2004 implementing Council Regulation (EC)
    No 139/2004 on the control of concentrations between undertakings, OJ L 133, 30.4.2004, p.1 (the
    “Implementing Regulation”), Annex I, Section 6.3.
                                                      6
 ---pagebreak--- (32)    Vertically, the following markets are affected: health insurance management services
        (upstream), and health insurance (a potential sub-segment of the accident and
        sickness non-life insurance market) (downstream).
(33)    The table below includes the Parties market shares in the affected markets.
                            Table 1: Affected markets in Portugal in 2018
                              Market shares based on GWP in million Euro
                 Accident     Motor         Assistance   Goods in Health               Health
                 Insurance    Vehicle       services     transit      insurance        insurance
                              Insurance                  insurance (downstream) management
                                                                                       services
                                                                                       (upstream)
Combined
market           [20-30]%     [20-30]%       [30-40]%    [20-30]%       [10-20]%         [10-20]%
share
Seguradoras
Unidas        /   [10-20]%     [10-20]%      [20-30]%     [20-30]%       [5-10]%         [10-20]%
AdvanceCare
Generali           [5-10]%      [0-5]%        [5-10]%      [0-5]%         [0-5]%             /
6.1.    Horizontally-affected markets
6.1.1. General considerations
(34)    The horizontally affected markets in this case (accident insurance, motor vehicle
        insurance, goods in transit insurance, and assistance services) present a certain
        number of similarities listed below.
(35)    In most horizontally affected market, the Parties’ combined market share is below
        25%, the level under which concentrations are presumed to not impede effective
        competition.20 In the only segment where the Parties exceed this threshold, their
        market share remains below 35%. The Parties’ market shares are thus significantly
        below the threshold under which a transaction is presumed to give rise to the
        creation or strengthening of a dominant position.21
(36)    In addition, in each horizontally affected market, the increment brought about by the
        smaller party (Generali) is relatively small, and in any event below 6%. The market
        investigation further did not reveal that Generali is a strong or disruptive player on
        the market, which would mitigate the relevance of such limited increment.
20  Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
    concentrations between undertakings, OJ C 031, of 05/02/2004 (the “Horizontal Merger Guidelines”),
    para. 18.
21 Horizontal Merger Guidelines, para. 17.
                                                      7
 ---pagebreak--- (37)    Furthermore, non-life insurance markets in Portugal are typically not strongly
        concentrated. On all horizontally affected markets, a significant number of
        competitors (at least nine) remain active, typically including the leading insurer for
        non-life insurance in Portugal, Fidelidade. As a result, customers would retain the
        ability to switch to a number of alternative suppliers post-transaction. The relatively
        limited concentration levels on these markets, combined with the lack of symmetry
        among Portuguese insurers preclude coordinated effects from arising as a result of
        the transaction.22
(38)    Finally, no respondent to the market investigation indicated that the transaction
        would be likely to have any negative impact on competition in the markets for non-
        life insurance services in Portugal.
6.1.2. Accident insurance
6.1.2.1. Notifying Party’s view
(39)    The Notifying Party states that the overlap between the Parties’ activities does not
        give rise to competition concerns, notably on the grounds that: (i) the combined
        market share23 in the potential market for accident insurance is only slightly over the
        affected market threshold of 20%; (ii) the increment of the concentration is small,
        and (iii) when combined with the market share in the market of health insurance
        (which is part of the same national insurance class), the combined market share is
        below 20%.
(40)    In addition, and this applies to all affected markets, the Notifying Party considers
        that switching costs are low, there are low barriers to entry and practically no
        capacity constraints for expansion and there are well-established and accessible
        distribution channels.
6.1.2.2. Commission’s assessment
(41)    The table below includes the Parties and their main competitors’ market shares.
22  Horizontal Merger Guidelines, paras. 39 and 48.
23  Unless otherwise noted, the market shares in this decision are based on GWP.
                                                           8
 ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak--- (67)   In terms of customer foreclosure, given the modest combined market share in the
       downstream market for health insurance, the combined entity would not be in a
       position to restrict the access of its upstream rivals to a significant customer base.
       Furthermore, the main competitors of the combined entity, Fidelidade, Ageas and
       Allianz, currently operate vertically integrated businesses, effectively creating their
       own customer base for health insurance management services.
(68)   Apart from that, the Parties’ existing supply relationships (see para. 56) imply that
       the transaction will have a limited impact on the market structure and will not result
       in significant merger-specific changes, as confirmed by the market investigation.29
6.2.3. Conclusion
(69)   In light of the above considerations, the Commission considers that the Transaction
       does not raise serious doubts as to its compatibility with the internal market as a
       result of either input or customer foreclosure on the markets for health insurance
       management services (upstream) and health insurance (downstream) in Portugal.
7.     CONCLUSION
(70)   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
29  Email from a competitor and minutes of a call with a competitor.
                                                         16