Motor insurance firms face no hard sanctions for 'anti-competitive' behaviour

Competition watchdog says the companies' commitment on pricing is a more effective outcome than fines or litigation
Motor insurance firms face no hard sanctions for 'anti-competitive' behaviour

Six car insurers and a brokers’ trade body will not be fined or face legal action despite findings of alleged behaviour that negatively impacted consumers.

The Competition and Consumer Protection Commission (CCPC) alleged the firms engaged in anti-competitive price signalling over a 21-month period, from 2015 to 2016, leading to premiums rising for consumers.

The alleged anti-competitive co-operation consisted of public announcements of future private motor insurance premium rises as well as other contacts between competitors.

In a report published today, the CCPC says it did not have the power to issue fines to the companies and said it would work towards embedding a “culture of competition law compliance” within the insurance industry.

Six insurers sign up to legal commitments

The six car insurers that signed up to these legal commitments are AA Ireland, AIG, Allianz, Axa, Aviva, and FBD. They have agreed to implement and maintain an appropriate competition law compliance programme that will include competition law training on pricing.

A seventh firm, Brokers Ireland, which was formed in 2017 following the amalgamation of two associations, one of which was the Irish Brokers Association (IBA), declined to enter into any commitments with the CCPC.

Brokers Ireland hits back at report

Brokers Ireland said it rejected “unreasonable and unwarranted” compliance demands on the basis that no anti-competitive practices were proven against the IBA.

It hit back at the report, calling it a “spiteful commentary intended to blacken and sully” the reputation of the organisation. It said the actions of the IBA were media commentary and lobbying, “which are legitimate functions of a trade association”, the firm said in a statement.

None of these seven firms were found to have breached competition law as the watchdog did not pursue litigation due to the cost it would accumulate. All seven strongly disagreed with the CCPC’s preliminary findings.

“There is currently no power under Irish competition law for civil fines to be imposed by the court,” stated the CCPC report. 

"In this case, given the uncertainties and cost associated with the court process, combined with the fact that the alleged conduct had already ceased and there would be no fines imposed in any event, the CCPC considered the commitments agreed to be the most effective outcome."

New law will beef up Commission's powers

The commission's powers will be increased this year on the back of the recent Competition (Amendment) Bill. Under the bill, those not complying with competition law could face a fine of €10m or 10% of worldwide turnover. It is not ruling out using legal commitments as a repercussion again in future.

“We will look to use our full toolkit and legal commitments will remain one of the options open to us. The final outcome will depend on the specifics of the case,” stated the CCPC on how it will tackle similar situations in future with these new powers.

The CCPC wrote to the Central Bank following the closure of the investigation outlining its concerns regarding Brokers Ireland’s failure to enter into legally-binding commitments.

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