The CNC has levied fines totalling €120,728,000 on insurance companies Asefa, Mapfre Empresas/Mapfre RE, Caser, Switzerland/Swiss RE, Scor and Münchener for a cartel agreement to set minimum prices for decennial insurance in Spain.
In 2002 the Spanish Building Regulatory Act (Ley de Ordenación de la Edificación), introduced the obligation on developers of new residential buildings to put in place insurance for latent defects (decennial insurance). In the environment of growing demand and in order to avoid the decline in decennial insurance prices, the leading insurers (Asefa and Mapfre Empresas) and the three top reinsurers (Scor, Switzerland and Münchener) met and exchanged information with the aim of reaching a minimum pricing arrangement to apply to the entire decennial insurance market. The agreement materialised in a document dated 5 December 2001, which fixed the policy for pricing decennial insurance.
The reinsurers undertook to include the agreement into the pricing guidelines they annex to the reinsurance contracts. These guidelines are compulsory for the insurers. This resulted in complete uniformity in the premiums proposed by the different underwriters present in the Spanish decennial insurance market, and the elimination of competition.
This cartel pricing arrangement remained in force between 2002 and 2007. According to the CNC, during that period the companies that formed part of the cartel made sure that the agreement was observed by themselves and by the insurers and reinsurers that operated in the decennial insurance and reinsurance market. Instances of non-compliance with the agreement were reported to the other cartel members and there is evidence that certain members of the cartel would exert concerted pressure and even boycott those companies that had shown a willingness to stray from the cartel's minimum price discipline.
The CNC found the cartel to represent a serious violation of competition law because, apart from its lengthy duration, the arrangement affected the entire market for a product which must, by law, be contracted into by housing developers; who are then able to pass on the increased cost via the final price of the home. The CNC resolved to levy sizeable fines on the companies that participated in the cartel to ensure that the wrongdoers do not find non-compliance with antitrust laws to be more profitable than compliance.
24 November 2009