EUROPEAN COMMISSION DG Competition

Only the English text is available and authentic.

REGULATION (EC) No 139/2004 MERGER PROCEDURE

Article 6(1)(b) NON-OPPOSITION Date: 17/01/2024

In electronic form on the EUR-Lex website under document number 32024M11234

EUROPEAN COMMISSION

Brussels, 17.01.2024 C(2024) 417 final

PUBLIC VERSION

In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004 concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus […]. Where possible the information omitted has been replaced by ranges of figures or a general description.

Assicurazioni Generali S.p.A. Piazza Duca degli Abruzzi, 2 34132 – Trieste Italy

Dear Sir or Madam,

(1) On 4 December 2023, the European Commission received notification of a proposed concentration pursuant to Article 4 of the Merger Regulation by which Assicurazioni Generali S.p.A. (“Generali” or the “Notifying Party”, Italy) will acquire, within the meaning of Article 3(1)(b) of the Merger Regulation, sole control of Liberty Seguros, Compañia de Seguros y Reaseguros, S.A. (“Liberty Seguros” or the “Target”, Spain) (the “Transaction”). Generali and Liberty Seguros are together referred to as the “Parties”.

1. THE PARTIES

(2) Generali is the ultimate parent company of Generali Group, an international group of companies active in the insurance and financial sector. The Generali group is mainly active in Europe in the provision and distribution of both life and non-life

1

OJ L 24, 29.1.2004, p. 1 (the ‘Merger Regulation’). With effect from 1 December 2009, the Treaty on the Functioning of the European Union (‘TFEU’) has introduced certain changes, such as the replacement of ‘Community’ by ‘Union’ and ‘common market’ by ‘internal market’. The terminology of the TFEU will be used throughout this decision. OJ L 1, 3.1.1994, p. 3 (the ‘EEA Agreement’).

2

Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111

insurance products, reinsurance products, assistance services, as well as real estate and asset management services.

(3) Liberty Seguros is an insurance company which belongs to the Liberty Mutual Insurance Group. Liberty Seguros offers non-life and life insurance products mainly in Spain, Portugal and Ireland.

2. THE OPERATION

(4) Pursuant to a sale and purchase agreement (the “SPA”) entered into by Generali and the selling parties Liberty Spain Holdings LLC and Liberty UK and Europe Holdings Limited on 15 June 2023, Generali will acquire 100% of the issued share capital in, and thereby sole control of, Liberty Seguros.

3. UNION DIMENSION

(5) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million (Generali: EUR 81 538.13 million; Liberty Seguros: 3 […]).Each of them has a Union-wide turnover in excess of EUR 250 million (Generali: EUR […]; Liberty Seguros: […]) and they do not achieve more than two-thirds of their aggregate Union-wide turnover within one and the same Member State. The notified operation therefore has a Union dimension.

4. RELEVANT MARKETS

4.1. Introduction

(6) The insurance industry provides financial protection to individuals, companies and government entities when certain specified events occur. This protection is referred to as insurance cover and an event against which a party seeks protection is referred to as risk. Companies known as insurance carriers or insurers typically provide the insurance cover. In relation to insurance, the Commission has identified in its past decisional practice three broad categories of insurance products: life

4 insurance, non-life insurance, and reinsurance.

(7) The Transaction gives rise to horizontal overlaps in the non-life insurance sector in Portugal where both Parties are active (see Section 4.2).The Transaction also gives rise to a vertical link between AdvanceCare (part of Generali Group)

5 upstream, which provides personal injury claims management services to insurance companies downstream, including providers of workers’ compensation insurance, where both Parties are active (see Section 4.3).

4.2. Non-life insurance

4.2.1. Relevant product market

4.2.1.1. The Commission’s previous practice

(8) In previous decisions relating to the insurance sector, the Commission has distinguished three broad categories of insurance products: (i) life insurance; (ii) non-life insurance; and (iii) reinsurance. The Commission has in the past also considered a separate market for assistance services, such as roadside assistance.

(9) The Commission has previously considered that non-life insurance could be divided into as many different product markets as there are types of risks to insure, delineated according to the applicable national insurance classification. More specifically, the Commission has distinguished between the following segments or risk classes: (i) accident and sickness; (ii) motor vehicle; (iii) property; (iv) liability; (v) marine, aviation and transport (“MAT”); (vi) credit and suretyship; (vii) travel insurance; (viii) cargo; (ix) speciality; and (x) aerospace. A further distinction could also be made between individual and group customers. The Commission ultimately left open the precise product market definition for non-life insurance products.

4.2.1.2. The Notifying Party’s views

(10) The Notifying Party has submitted that considering the regulatory regime in Portugal and, more specifically the fact that all major non-life insurers in the Portuguese market are authorised to provide insurance in essentially all non-life insurance segments, the appropriate delineation would be an overall non-life insurance market. The Notifying Party has nevertheless provided market information in a narrower segmentation according to risk type identified by national legislation in accordance with the Commission’s previous practice. Moreover, the Notifying Party has also provided market information on sub-segments of the different risk types further sub-segmenting the various risk classes.

4.2.1.3. The Commission’s assessment

(11) A large majority of customers and all competitors responding to the market investigation confirmed that the market for non-life insurance is best delineated along the various non-life insurance classes as laid down in national legislation. In the case of Portugal this would entail a delineation along the insurance classes as provided for in the Regime Jurídico de Acesso e Exercício da Atividade Seguradora e Resseguradora, (RJASR), which reflect the delineation contemplated by the Commission in its previous decisions (see recital (9)).

(12) The Commission considers that there is no reason to depart from the past decisional practice and the exact product market definition for the provision of non-life insurance can be left open in this case, as the Transaction does not raise serious doubts as to its compatibility with the internal market under any plausible market definition.

4.2.2. Relevant geographic market

4.2.2.1. The Commission’s previous practice

(13) Regarding the provision of non-life insurance in the segments affected by this Transaction, in its prior practice the Commission considered that the markets are generally national in scope (except for MAT insurance, where it considered an EEA-wide market due to the cross-border nature of the insured risk).

4.2.2.2. The Notifying Party’s views

(14) The Notifying Party takes no view on the exact market definition.

4.2.2.3. The Commission’s assessment

(15) In response to the market investigation, all competitors and a large majority of customers consider that competition takes place at the national level.

(16) This confirms the geographic scope of the non-life insurance markets or segments affected by the Transaction as previously considered by the Commission.

(17) In any event, while the geographic scope of the market is not narrower than national, the exact geographic market definition for the provision of non-life insurance can be left open in this case, as the Transaction does not raise serious doubts as to its compatibility with the internal market under any market definition.

4.3. Personal injury claims management services

4.3.1. Relevant product market

(18) The Transaction gives rise to a vertical link between AdvanceCare (part of Generali Group) upstream, which provides personal injury claims management services to insurance companies downstream, including providers of workers’ compensation insurance (which fall within accident and sickness insurance), where both Parties are active.

4.3.1.1. The Commission’s previous practice

(19) The Commission has not previously considered personal injury claims management services. However, it has considered the broader market for health insurance management services, where it found that in-house and third-party provision of health insurance management services should be considered part of the same product market.

4.3.1.2. The Notifying Party’s views

(21) The Notifying Party submits that the product market for personal injury claims management services is a separate product market that includes both the independent provision of such services and equivalent services provided in-house by insurers. The option to outsource these management services or to provide them in-house is driven predominantly by cost efficiency concerns and, in that context, internal provision of the relevant insurance and personal injury claims management services by insurers poses a significant competitive constraint on the operations of independent third-party providers such as the Generali subsidiary AdvanceCare.

4.3.1.3. The Commission’s assessment

(22) A product market for personal injury claims management services as a separate product market that includes both the independent provision of such services and equivalent services provided in-house by insurers is not inconsistent with the Commission’s past decisions.

(23) In any event, the exact product market definition for the provision of personal injury claims management services can be left open in this case, as the Transaction does not raise serious doubts as to its compatibility with the internal market under any plausible market definition, regardless of whether personal injury management services should include services provided in-house or not.

4.3.2. Relevant geographic market

4.3.2.1. The Commission’s previous practice

(24) The Commission has not previously considered the geographic market for personal injury claims management services. In relation to the broader market for health insurance management services, the Commission considered that the geographic market could be national in scope, but ultimately left the definition open. In relation to the market for personal injury claims management services, the Portuguese Competition Authority also considered the relevant geographic market to be national, but ultimately left the definition open.

4.3.2.2. The Notifying Party’s views

(26) The Notifying Party takes no view on the exact market definition.

4.3.2.3. The Commission’s assessment

(26) In line with the Commission’s precedents in health insurance management services and the Portuguese Competition Authority’s precedents in personal injury claims management services, the Commission considers that the relevant geographic market is likely national in scope. However, while the geographic scope of the market is not narrower than national, the exact geographic market definition for the provision of personal injury claims management services can be left open in this case, as the Transaction does not raise serious doubts as to its compatibility with the internal market under any market definition.

5. COMPETITIVE ASSESSMENT

5.1. Analytical framework

(27) Article 2 of the Merger Regulation requires the Commission to examine whether notified concentrations are compatible with the internal market, by assessing whether they would significantly impede effective competition in the internal market or in a substantial part of it.

(28) In this respect, a merger may entail horizontal and/or non-horizontal effects. Non-horizontal effects are those deriving from a concentration where the undertakings concerned are active in different, but related, relevant markets.

(29) A case where a merger entails both horizontal and non-horizontal effects may for instance be when the merging firms are not only in a vertical relationship, but are also actual or potential competitors of each other in one or more of the relevant markets concerned. In such a case, the Commission will appraise horizontal and vertical effects in accordance with the guidance set out in the relevant notices.

(30) As regards the assessment of horizontal overlaps, the Commission’s guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings (the “Horizontal Merger Guidelines”) distinguish between two main ways in which mergers between actual or potential competitors on the same relevant market may significantly impede effective competition, namely non-coordinated and coordinated effects.

(31) Non-coordinated effects may significantly impede effective competition by eliminating important competitive constraints on one or more firms, which consequently would have increased market power, without resorting to coordinated behaviour. In that regard, the Horizontal Merger Guidelines consider not only the direct loss of competition between the merging firms, but also the reduction in competitive pressure on non-merging firms in the same market that could be brought about by the merger.

(32) Coordinated effects may change the nature of competition in such a way that firms that previously were not coordinating their behaviour, are now significantly more likely to coordinate and raise prices or otherwise harm effective competition. A merger may also make coordination easier, more stable or more effective for firms which were coordinating prior to the merger.

(33) As regards non-horizontal mergers, the Commission’s guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings (the “Non-Horizontal Merger Guidelines”) consider vertical mergers involving companies operating at different levels of the supply chain.

(34) There are two main ways in which non-horizontal mergers may significantly impede effective competition: non-coordinated effects and coordinated effects.

(35) Non-coordinated effects may principally arise when non-horizontal mergers give rise to foreclosure.

(36) Coordinated effects may arise in situations where competition changes as referred to in recital (32).

(37) A merger may result in foreclosure where actual or potential rivals’ access to supplies or markets is hampered or eliminated as a result of the merger, thereby reducing these companies’ ability and/or incentive to compete. Two forms of foreclosure can be distinguished. The first is where the merger is likely to raise the costs of downstream rivals by restricting their access to an important input (input foreclosure). The second is where the merger is likely to foreclose upstream rivals by restricting their access to a sufficient customer base (customer foreclosure).

(38) Input foreclosure arises where, post-merger, the new entity would be likely to restrict access to the products or services that it would have otherwise supplied, absent the merger, thereby raising its downstream rivals’ costs by making it harder for them to obtain supplies of the input under similar prices and conditions as absent the merger. This may lead the merged entity to profitably increase the price charged to consumers, resulting in a significant impediment to effective competition. In assessing the likelihood of an anticompetitive input foreclosure scenario, the Commission examines, first, whether the merged entity would have, post-merger, the ability to substantially foreclose access to inputs, second, whether it would have the incentive to do so, and third, whether a foreclosure strategy would have a significant detrimental effect on competition downstream.

(39) Customer foreclosure may occur when a supplier integrates with an important customer in the downstream market. Because of this integration, the merged entity may foreclose access to a sufficient customer base to its actual or potential rivals in the upstream market and reduce their ability or incentive to compete. In turn, this may raise downstream rivals’ costs by making it harder for them to obtain supplies of the input under similar prices and conditions as absent the merger. This may allow the merged entity profitably to establish higher prices on the downstream market. In assessing the likelihood of an anticompetitive customer foreclosure scenario, the Commission examines, first, whether the merged entity would have the ability to foreclose access to downstream markets by reducing its purchases from its upstream rivals, second, whether it would have the incentive to reduce its purchases upstream, and third, whether a foreclosure strategy would have a significant detrimental effect on consumers in the downstream market.

5.2.3.1. The Notifying Party’s views

(52) The Notifying Party submits that the property insurance market as a whole or its subsegment ODP insurance (without further segmentation) are not affected by the Transaction. According to the Notifying Party no competition concerns will arise in the market for ODP - commercial multiple risks insurance considering that there will remain several other relevant operators active in this segment post-Transaction, such as Fidelidade (23.0%), Ageas (18.2%), Zurich (7.3%), Allianz (7.1%) and CA Seguros (4.5%).

5.2.3.1. The Commission’s assessment

(53) In response to the market investigation, no competitors or customers voiced concerns relating to the ODP insurance market.

(54) The Commission observes the market share of the combined entity is below 30% in ODP – commercial multiple risks insurance (26.1%) and various other competing insurance providers will remain on the market post-Transaction, including the market leader Fidelidade at 23% and Ageas at 18.2%. Moreover, the increment brought about by Liberty Seguros is limited (4.3%).

(55) In light of the above, the Commission concludes that the Transaction does not give rise to serious doubts as to its compatibility with the internal market as regards the possible relevant market for the provision of ODP - commercial multiple risks insurance.

5.3. Assessment of vertical links

(56) The Transaction gives rise to a vertical link between the personal injury claims management services provided by AdvanceCare (part of Generali Group that provides management services related to personal injury claims and to the determination of injured persons’ subsequent incapacity levels) upstream, to insurance companies downstream providing workers’ compensation, motor, personal accident, and life insurance downstream. Of these, the vertical link between AdvanceCare’s activities upstream and the combined entities’ activities in workers’ compensation insurance downstream, where the Parties’ combined market share is over 30% (although only by a small margin, see Section 5.2.1 above) give rise to an affected vertical market.

5.3.1. The Notifying Party’s views

(57) The Notifying Party submits that, with a marginal market share ([0-5]%) and […] turnover (EUR […] in 2022) AdvanceCare is a small player in the market for personal injury claims management services. Moreover, there is no actual vertical link because AdvanceCare […] to Generali, as Generali […] these services. The Parties submit that internal provision of the relevant insurance and personal injury claims management services by insurers poses a significant competitive constraint on the operations of AdvanceCare.

(58) The Transaction is therefore unlikely to result in any anticompetitive vertical effects.

5.3.2. Commission’s assessment

(59) In response to the market investigation, no competitors or customers voiced concerns relating to AdvanceCare’s provision of personal injury claims management services or that the Transaction might impact the supply of these services.

(60) Moreover, AdvanceCare only has a small market share of [0-5]% and is subject to significant competition in the market for personal injury claims management services for workers’ compensation insurance from Fidelidade, ([20-30]% market share), Trust ([10-20]% market share), Allianz ([5-10]% market share), and Lusitânia ([5-10]% market share).

(61) In terms of input foreclosure, it is unlikely that AdvanceCare would be able to foreclose the Parties’ downstream rivals from accessing personal insurance management services post-Transaction, given its limited market position and that customers could easily switch to an alternative supplier, including in-house suppliers. Furthermore, AdvanceCare would not have an increased incentive to engage in input foreclosure, as the combined entity’s share in the downstream market for workers’ compensation insurance will only be increasing by an increment of 3.2% from Liberty Seguros and will remain moderate at 30.9%.

(62) In terms of customer foreclosure, given the small increment in the upstream market for personal injury claims management services and that the combined market share in the downstream market for workers’ compensation insurance is only slightly above 30% (30.9%), the combined entity would not have the ability to foreclosure its upstream rivals by restricting their rivals’ access to a significant customer base. Furthermore, the combined entity would not have the incentive to foreclosure these rivals, as its main competitors, Fidelidade, Ageas and Allianz, currently operate vertically integrated businesses, effectively creating their own customer base for personal injury claims management services that would not be affected by the Transaction.

(63) In light of the above considerations, the Commission considers that the Transaction does not raise serious doubts as to its compatibility with the internal market as a result of either input or customer foreclosure on the markets for personal injury claims management services (upstream) and workers’ compensation insurance (downstream) in Portugal.

6. CONCLUSION

(64) For the above reasons, the European Commission has decided not to oppose the notified operation and to declare it compatible with the internal market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger Regulation and Article 57 of the EEA Agreement.

For the Commission

(Signed) Margrethe VESTAGER Executive Vice-President

15