On 1 September 2016 the Bulgarian Commission for the Protection of Competition (“CPC”) issued a decision stating its conclusions drawn from the sector analysis of the competitive environment in the insurance sector in Bulgaria in the period 2010-2014. The purpose of the analysis was to provide an overview of the insurance market, to outline the trends for its development, but also to identify potential competition problems, and respectively to offer adequate means to resolve them.

Based on the results from the sector analysis and its powers under the Protection of Competition Act (“PCA“), on 30 September 2016 the CPC announced that it had initiated investigations into nine insurance companies operating in Bulgaria over potential resale price maintenance (RPM) practices in the insurance sector. The CPC suspects that the companies prevented intermediaries from setting their own fees, and from effectively offering discounts.

According to the CPC, some of the reviewed agreements between insurers and intermediaries contain clauses which indirectly restrict the intermediaries to determine their discounts to end customers, or at least such discounts would require the consent of the insurer. Such potentially infringing practices and agreements, if confirmed by the CPC during individual proceedings, would not allow the companies to benefit from the Block Exemption (found in Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices), while price fixing and minimum resale price maintenance are blacklisted.

The CPC will now investigate the nine companies and their practices which allegedly breach competition rules, having the power to request documents and information and to carry out unannounced investigations (dawn raids). If, as a result of its investigations the CPC decides to raise accusations for infringement of the PCA against any of the companies, the latter shall be entitled to submit written objections and to present a defensive thesis in an open hearing before the CPC. The CPC may impose a fine in the amount of up to 10% of the aggregate annual turnover of the infringer in Bulgaria in the previous financial year.