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Spanish Appeal Court Quashes Fine of € 120 million imposed by Competition Commission

    • Competition, EU and Trade - Competition e-briefings


    In 2009, the Spanish Competition Commission (CNC) imposed fines totaling 120 million on 6 companies for having participated in a cartel in the re-insurance sector, in particular in the building construction insurance sector. Fines were imposed on insurance companies CASER, MAPFRE and ASEFA and three re-insurer companies namely SUIZA, SCOR and MUNCHENER. Each of the six companies appealed against the CNC decision. The CNC decision has represented the highest fine ever imposed by the CNC in a cartel case in Spain.

    The Appeal Court (Audiencia Nacional), in 3 separate judgments issued from 18th December to 4the January, has now annulled the entire amount of the fines imposed in the six cases. Although only three judgments have been published in their entirety, there is public information that the remaining three rulings are also quashing the CNC decision. In each of the 3 judgments already published, different judges rapporteur have intervened although the line of reasoning is similar.

    Firstly, the Appeal Court rejects that the contacts between the companies had the object to restrict competition. A distinction should be made between the "commercial premium" paid by final customers and the "risk premium" or costs resulting from establishing an insurance to cover a particular type of accident or disaster. In this regard, the Appeal Court takes into account that both the Spanish Private Insurance Act and the European Block Exemption Regulation 358/2003 allow for the exchange of information among insurance companies in order to calculate the risk premium. In fact, the Court considers that there was a crisis in France in 1990 due to miscalculation of such premium risk in relation to the building construction insurance. Moreover, the Spanish Insurance Act prohibits resale at a loss and thus, it obliges to set the commercial premium at a level which must be sufficient to cover the risk premiums or costs. The Appeal Court also assessed the novelty and complexity of this particular type of insurance.

    Secondly, the Appeal Court finds that the CNC did not prove that the effects of the exchanges of information between the insurance companies restricted competition.

    The CNC has recently published in its Annual Report of Activities that out of the total appeals filed with the Courts since September 2007, 82% of the judicial rulings have confirmed the CNC decisions.

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