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: 05/05/2023

In electronic form on the EUR-Lex website under document number 32023M10986

EUROPEAN COMMISSION

Brussels, 5.5.2023 C(2023) 3109 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 Where possible the information omitted has been replaced by ranges of figures or a general description.

AXA Seguros Generales, S.A. de Seguros y Reaseguros Emilio Vargas, 6 28043 Madrid Spain

Dear Sir or Madam,

(1) On 27 March 2023, the Commission received notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (the “Merger Regulation”), by which AXA Seguros Generales, S.A. de Seguros y Reaseguros (“AXA Seguros Generales” or the “Notifying Party”) which forms part of AXA Spain and is ultimately controlled by the French listed company AXA, S.A., (together the “AXA Group”) will acquire sole control over GACM España,

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.

2 OJ L 1, 3.1.1994, p. 3 (the ‘EEA Agreement’).

3 OJ L 24, 29.1.2004, p. 1 (the ‘Merger Regulation’).

Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË

Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.

S.A.U. (“GACM Spain” or “Target”), by way of purchase of shares (the “Transaction”). Together, AXA Spain and GACM Spain are referred to as the “Parties”.

T HE PARTIES

(2) AXA Seguros Generales is part of an insurance group registered in Spain, authorised to carry on the business of insurance and reinsurance in health, life and savings (through the insurance company AXA Aurora Vida, S.A., de Seguros y Reaseguros), pension funds (through AXA Pensiones S.A., E.G.F.P.), auto and other personal and business insurance, among others (“AXA Spain”).

(3) GACM Spain is a holding company of the French company Groupe des Assurances du Crédit Mutuel, S.A. (“GACM, S.A.”). GACM Spain provides various forms of insurance products across Spain through its subsidiaries: GACM Seguros Generales, Compañía de Seguros y Reaseguros, S.A., Agrupació AMCI D'Assegurances i Reassegurances, S.A. and Atlantis Vida, Compañía de Seguros y Reaseguros, S.A.

T HE CONCENTRATION

(4) Pursuant to a share purchase agreement entered into between AXA Seguros Generales and GACM S.A. on 13 December 2022, AXA Seguros Generales will acquire 100% of the share capital and voting rights of GACM Spain, thus acquiring sole control over the Target within the meaning of Article 3(1)(b) of the Merger Regulation.

UNION DIMENSION

(5) The undertakings concerned have a 2022 combined aggregate worldwide turnover of more than EUR 5,000 million (AXA Group: EUR 102,345 million; GACM Spain EUR 403 million; combined: EUR 102,748 million). AXA Group and GACM Spain each have an EU-wide turnover in excess of EUR 250 million (AXA Group: EUR [>250] million; GACM Spain: EUR [>250] million). While GACM Spain achieves more than two thirds of its aggregate Union-wide turnover in Spain, AXA Group does not. Therefore, the notified concentration has a Union dimension under Article 1(2) Merger Regulation.

OVERVIEW OF THE PARTIES’ ACTIVITIES

(6) The Transaction gives rise to the following horizontal overlaps and vertical relationships between the Parties’ activities.

i. Horizontal Overlaps: The Transaction involves five overlaps in the provision of (i) life insurance, (ii) non-life insurance, (iii) distribution of insurance products, (iv) reinsurance, and (v) the provision of hospital services in Spain.

4 Publication in the Official Journal of the European Union No C 126, 11.04.2023, p. 3.

5 Annex 2.2. to the Form CO.

ii. Vertical Relationships: There are vertical relationships between (i) the provision of inpatient private hospital services in the provinces of Barcelona and Cantabria (upstream) and the provision of healthcare insurance in Spain (downstream); (ii) the provision of assistance services (upstream) and the provision of assistance insurance (downstream), a plausible segment within the provision of non-life insurance.

(7) Under all potential market delineations, the Parties’ combined market shares remain below 20% (for horizontal relationships), and their combined or individual market shares below 30% (for vertical relationships).The only exception is the vertical relationship between the provision of inpatient private hospital services in the province of Cantabria (upstream), in which AXA Spain holds a market share of [30-40]% and the provision of healthcare insurance in Spain (downstream), which results in vertically affected markets only when considering the narrowest possible segment for the provision of hospital services, namely private inpatient hospitals.Through its ownership of Hospital Mompía in the region of Cantabria, AXA Spain is active in the provision of inpatient private hospital services and both Parties are active in the provision of healthcare insurance across Spain with a combined market share of [0-5]%

MARKET DEFINITIONS

Provision of hospital services

Product market definition

(8) The Commission considered in past decisions whether separate markets exist for public and for private hospital services. The Commission found that this distinction depends on the way healthcare systems are structured, regulated, and funded in each Member State. For example, the Commission found that separate markets exist for private and public hospital services in the UK and Greece, while the Commission has consistently held that the market for hospital services in Germany comprises both public and private hospitals.The Commission has not

6 The Parties’ activities horizontally overlap, but do not give rise to horizontally affected markets, in the markets of life insurance, non-life insurance, distribution of insurance products and reinsurance in Spain. The Parties’ combined market shares are below 10% under any plausible product and geographic market definition (except for the potential segment of liability insurances, where the Parties’ combined market shares remain below 20%).

7 The vertical relationship between the provision of assistance services (upstream) where AXA Spain is active and the provision of assistance insurance (downstream), a plausible segment within the provision of non-life insurance, where both Parties are active, does not give rise to vertically affected markets, as the Parties’ market shares in each of those markets remain at below 10% under any plausible product and geographic market definition.

(9) The Notifying Party argues that there is an increasing level of interaction between the public and private healthcare sectors in Spain, which could indicate the existence of a single market encompassing both private and public hospitals but considers that for the purpose of the present case, it is not necessary to define conclusively the relevant product market because the presence of the Parties under any plausible product market definition is limited.

(10) The Commission considers that the exact product market definition for the provision of hospital services can be left open in this case as the Transaction does not raise concerns as to its compatibility with the internal market irrespective of the exact product market definition.

Geographic market definition

(12) In prior decisions, the Commission indicated that the market for private hospital services was not broader than national in scope usually considering that it is narrower, i.e. regional or local.

(13) The Notifying Party considers that the precise scope of the geographic market can be left open since the Transaction will not lead to any competition concerns on any plausible geographic market definition. The Transaction only gives rise to a vertically affected link when considering Cantabria as the most narrowly defined regional market.

(14) The Commission considers that the exact geographic market definition for the provision of hospital services can be left open in this case as the Transaction does not raise concerns as to its compatibility with the internal market irrespective of the exact geographic market definition.

Healthcare Insurance services

Product market definition

(15) In previous decisions relating to the insurance sector, the Commission has distinguished between three large categories of insurance product markets: life

14 “Inpatient hospital services” refers to preventive, therapeutic, surgical, diagnostic, medical and rehabilitative services that are furnished by a hospital for the care and treatment of inpatients and are provided in the hospital by or under the direction of a physician, whereas “outpatient hospital services” refers to hospital services that can be provided to the patient in a setting that does not involve an overnight hospital stay. AXA Spain is not active in outpatient services in Cantabria.

15 Case M.10301 - CVC/Ethniki, paragraph 32.

16 Form CO, paragraphs 114-119.

17 Form CO, paragraph 120.

18 Case M.10301 - CVC/Ethniki, paragraph 39.

19 Case M.10301 - CVC/Ethniki, paragraph 48.

20 Form CO, paragraph 138.

(16) The Notifying Party considers that for the purpose of the present case, it is not necessary to define the relevant product market because, even under the narrowest possible product market definition, namely healthcare insurance services by type of customer, the addition of market shares as a consequence of the Transaction will be mostly immaterial and the Parties’ combined market shares would be below 20% in a market that faces strong competitive pressure from important, long-established competitors.

(17) The Commission considers that the exact product market definition for healthcare insurance services can be left open in this case as the Transaction does not raise concerns as to its compatibility with the internal market under any plausible product market definition.

Geographic market definition

(18) As regards the market for non-life insurance products and its potential various sub-segments, such as healthcare insurance, the Commission has confirmed that such markets are generally national in scope.

(19) The Notifying Party argues that the relevant geographic market of non-life insurance products and its potential various sub-segments should be considered as national in scope in line with the relevant Commission precedent.

(20) The Commission considers that the exact geographic market definition for healthcare insurance services can be left open in this case as the Transaction does not raise concerns as to its compatibility with the internal market under any plausible geographic market definition.

COMPETITIVE ASSESSMENT

Framework for the competitive assessment of vertically affected markets

26 (21) Under the Non-Horizontal Merger Guidelines, a transaction with vertically affected markets may significantly impede effective competition if the merger gives rise to foreclosure. Foreclosure occurs where actual or potential competitors’ access to supplies or markets is hampered or eliminated as a result of the merger, thereby reducing those companies’ ability and/or incentive to compete. Such

foreclosure may discourage entry or expansion of competitors or encourage their exit.

(22) The Non-Horizontal Merger Guidelines distinguish between two forms of foreclosure: input foreclosure and customer foreclosure.

(23) Input foreclosure arises where, post-merger, the new entity would be likely to restrict access to the products or services that it would have supplied absent the merger, thereby raising 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 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.

(24) 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 competition downstream.

Vertically affected markets - Inpatient private hospitals in the province of Cantabria, Spain (upstream) – Healthcare insurance in Spain (downstream)

(25) As indicated in paragraph (7) above, the Transaction leads to vertically affected markets for the provision of inpatient private hospital services in the province of Cantabria (upstream) and the Spanish healthcare insurance market (downstream).

(26) While both Parties are active downstream in the provision of healthcare insurance in Spain (with a combined market share of approximately [0-5]%), AXA Spain is active upstream in the possible market for the provision of inpatient private hospital services in the province of Cantabria, where it owns hospital Mompía, with a regional market share of [30-40]%.

(27) The Notifying Party submits that the Parties would have neither the ability nor the incentive to engage in any input or customer foreclosure because AXA Spain’s market share upstream only […] exceeds the 30% threshold under the narrowest plausible product and geographic market definition and the Parties have a negligible market position downstream. The Commission considers that the Transaction does not raise concerns in relation to an input foreclosure theory of harm. Despite AXA Spain’s market share upstream ([30-40]% in the province of Cantabria), the Transaction will not lead to any competition concerns considering that AXA Spain would not have neither the ability nor an incentive to foreclose because: (i) AXA Spain’s market share on the upstream market for the provision of inpatient private hospital services only […] exceeds the 30% threshold; and (ii) there is sufficient competition that will remain on the market upstream, as there is a number of inpatient private hospitals in the region of Cantabria that will continue to exert sufficient competitive pressure on the Parties (as indicated in Table 1 below).

Table 1: Inpatient Private Hospitals in Cantabria, Spain 2021-2022

Private Hospitals in Cantabria

Market Shares

Hospital Mompía (AXA Spain)

[30-40]%

Hospital Santa Clotilde

[30-40]%

C.H. Padre Menni

[10-20]%

Hospital Ramón Negrete

[5-10]%

Form CO, paragraphs 192-293

(28) The Commission considers that the Transaction does not raise any concerns in relation to a customer foreclosure theory of harm, considering that the Parties’ combined market shares in the downstream market for the provision of healthcare insurance services are at below 30% under any plausible product and geographic market definition, which evidently indicates that the Parties will have no ability to engage in customer foreclosure post-Transaction. In light of that, the Parties would also not have any incentive in pursuing a customer foreclosure strategy. The lack of any potential effects is further evidenced by the fact that this vertical relationship pre-dates the Transaction and the Target accounts for only a de minimis share of demand at the national level as well as in the province of Cantabria ([0-5]% and [0-5]% respectively). Consequently, the Transaction will not give rise to any competition concerns because of customer foreclosure.

33 Form CO, paragraphs 211-238.

34 Form CO, paragraphs 222-233.

CONCLUSION

(29) For the above reasons, the European Commission has decided not to oppose the notified concentration 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

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