Compendium of Insurance Law
10
COMPETITION AND INSURANCE
OVERVIEW
10.1 UK competition law has been transformed since 1998. The Competition Act 1988 and the Enterprise Act 2002 repealed most of the earlier legislation and replaced it with a more logical structure which is based on the EU’s competition rules set out in Arts 81 and 82 of the EC Treaty and in the Mergers Regulation, Council Regulation 139/2004/EC. Part I of the Competition Act prohibits agreements which have as their object or effect the prevention, restriction or distortion of trade within the UK: this echoes Art 81 of the EC Treaty, which is concerned with cross-border agreements affecting the EU market rather than an individual domestic market. Part II of the Competition Act 1998 prohibits abuse of dominant position, in the form of conduct by an undertaking with market dominance which prevents, restricts or distorts competition within the UK: this echoes Art 82 of the EC Treaty, which performs a similar function for cross-border abuses. Investigations are conducted by the Office of Fair Trading. The Enterprise Act 2002 establishes a procedure for the investigation of individual markets (a process which has no counterpart in EU law) and for the investigation of mergers (which reflects the EU Merger Regulation): references are made by the OFT to the Competition Commission for its investigation and report. The relevant provisions are not reproduced in the present work, as they are not specific to insurance and in practice have had a relatively limited impact on the insurance market.10.2 EU law does, by contrast, make specific provision for the regulation of competition in the insurance sector. Council Regulation 1534/91/EC authorised the European Commission to adopt a block exemption from Art 81 for agreements in the insurance sector. Commission Regulation 3932/92/EC implemented the Regulation, although the Commission chose not to exercise all of the powers conferred upon it because there was insufficient evidence available as to the effect of particular classes of market agreement. Commission Regulation 3923/92 was replaced by Commission Regulation 359/2003/EC. The current provision has again not granted to the insurance industry the full freedoms contemplated by Council Regulation 1534/91/EC.10.20 COUNCIL REGULATION (EEC) NO 1534/91 OF 31 MAY 1991 ON THE APPLICATION OF ARTICLE 85(3) OF THE TREATY TO CERTAIN CATEGORIES OF AGREEMENTS, DECISIONS AND CONCERTED PRACTICES IN THE INSURANCE SECTOR
General Note
This Regulation authorises the European Commission to adopt a Block Exemption under Art 81(3) of the Treaty of Rome, exempting various types of agreements between insurers from Art 81(1) of the Treaty of Rome. The Block Exemption adopted by the Commission, Commission Regulation 259/2003/EC, is more limited than is permitted by Council Regulation 1534/91. See para 10.21 for the text of the Block Exemption. The text of this Regulation has been amended to take account of the renumbering of the articles of the EC Treaty following its amendment by the Maastricht Treaty: Art 81 was previously Art 85. It may also be noted that EC competition law was updated with effect from 1 May 2004, with the Commission transferring to member states the power to grant individual exemptions from Art 81(1) by decision under Art 81(3).