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: 07/12/2021

In electronic form on the EUR-Lex website under document number 32021M10447

EUROPEAN COMMISSION

Brussels, 07.12.2021 C(2021) 9240 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 Where possible the information omitted has been replaced by ranges of figures or a general description.

NN Group N.V. Schenkkade 65 2595 AS The Hague Netherlands

Dear Sir or Madam,

(1) On 29 October 2021, the European Commission received notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (“EUMR”), by which NN Group N.V. (together with its subsidiaries, "NN", or the "Notifying Party", the Netherlands), acquires within the meaning of Article 3(1)(b) sole control of the whole of MetLife Life Insurance S.A. (together with its subsidiary MetLife Mutual Fund Company, "MetLife Greece") and of MetLife Towarzystwo Ubezpieczeń na Życie i Reasekuracji S.A. (together with its subsidiaries (i) MetLife Towarzystwo Funduszy Inwestycyjnych S.A.; (ii) MetLife Powszechne Towarzystwo Emerytalne S.A., and (iii) MetLife Services sp. z o.o., "MetLife

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’).

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.

3Poland") by way of purchase of shares (“the Transaction”). MetLife Greece and MetLife Poland are together referred to as “the Target” and together with NN as the “Parties”.

THE PARTIES

(2) NN is a financial services company listed on the Euronext Amsterdam with a presence in 20 countries, including several European countries and Japan. NN offers retirement services, pensions, insurance, investments, and banking services. NN is inter alia active in Poland, in life insurance and asset management, and in Greece, in life and health insurance.

(3) MetLife Greece is active in the provision of life and health insurance in Greece.

(4) MetLife Poland is active in the provision of life insurance and asset management in Poland.

THE OPERATION AND THE CONCENTRATION

(5) By virtue of two separate share purchase agreements, one for MetLife Greece and one in MetLife Poland (“SPA”), both signed on 4 July 2021 by NN Continental Europe Holdings B.V., which holds NN's insurance activities in Europe, and MetLife EU Holding Company Limited, the Target’s current owner, NN will acquire sole control of MetLife Greece and of MetLife Poland.

(6) The Notifying Party notes that pursuant to Article 5(2) of EUMR, the Proposed Transaction constitutes a single concentration as it concerns transactions entered into between the same undertakings which take place within a two-year period.

(7) The Transaction therefore constitutes a concentration under Article 5(2) of the EUMR.

UNION DIMENSION

(8) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million (NN: EUR 14 864 million; Target: EUR […] million). Each of NN and the Target has a Union-wide turnover in excess of EUR 250 million (NN: EUR […] million; Target: EUR […] million), but 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.

3 Publication in the Official Journal of the European Union No C 453, 09.11.2021, p. 5.

4 MetLife Mutual Fund Company, an entity owned for 90% and wholly controlled by MetLife Greece.

5 MetLife Towarzystwo Funduszy Inwestycyjnych S.A., MetLife Powszechne Towarzystwo Emerytalne S.A. and MetLife Services sp. z o.o., all 100% owned by MetLife Poland;

6 Point 50 of the Jurisdictional Notice confirms that Article 5(2) of EUMR also applies to "simultaneous transactions between the same parties”.

7 Turnover calculated in accordance with Article 5 of EUMR.

2

COMPETITIVE ASSESSMENT

4.1Activities of the Parties

(9) The Transaction results in horizontal overlaps in life insurance, pension products and insurance distribution in Greece and Poland, as well as in asset management in Poland.

(10) Regarding life insurance in Greece and pension products in Greece and Poland, the Transaction gives rise to horizontally affected markets in certain plausible segmentations, which may constitute separate markets.

(11) Regarding the horizontal overlaps in the insurance distribution sector in Greece, as well as in the life insurance, insurance distribution and asset management sectors in Poland, the Transaction does not give rise to any horizontally affected markets under any plausible market definition. Moreover, the market investigation did not give rise to any suggestion that the Transaction would raise serious doubts as to its compatibility with the internal market in any of these markets in either Greece, or Poland. Therefore, these markets will not be further assessed in this decision.

(12) The Transaction also results in vertical relationships between the Parties' life insurance and pension products activities on the one hand and their limited activities either upstream (in reinsurance), or downstream (in life insurance distribution and asset management) on the other.

(13) The Commission takes note that in Poland pension products, by law, cannot be distributed through indirect distribution channels by third parties. Each pension products provider has to distribute its own products and cannot distribute the products of another pension products providers. Therefore, no vertical link arises between pension products and insurance distribution in Poland.

(14) Moreover, the Commission takes note that all pension funds active in the affected segment in Poland carry out the management of assets of those pension funds exclusively in-house. Therefore, to date no real market exists in which asset managers compete for asset management mandates from pension funds or, vice versa, where pension funds seek third party asset management services in Poland. The emergence of such a market in the future is highly unlikely given the regulatory changes (discussed in section 4.3.1.3 below), which means that the affected pensions fund market segment in Poland will likely cease to exist.

(15) The Parties’ activities in the relevant upstream and downstream markets are negligible: reinsurance worldwide [0-5]%; insurance distribution in Greece [0-5]%, respectively.

(16) Nevertheless, the Transaction would result in these markets being vertically affected given that in several potentially narrower markets in the area of life and health

8 Form CO, Sections 6.5, 6.6, 6.7, 6.14, 6.15, 6.16, 6.17 and 6.18.

9 Replies to Q1 – Questionnaire to competitors - Greece, questions 11 and 19, Q2 – Questionnaire to corporate customers - Greece, question 20 and Q3 Questionnaire to competitors – Poland question 8.

10 Form CO paragraph 94.

insurance in Greece and of pension products in Greece and Poland the combined market shares of the Parties are above 30%

4.2Market definitions

4.2.1Life and health insurance (Greece)

Product market definition

(17) In previous decisions, the Commission distinguished between three broad categories of insurance products: (i) life insurance, (ii) non-life insurance and (iii) reinsurance. The Commission also considered the definition of a downstream market for insurance distribution, upstream markets for asset management and pension administration, and considered assistance services as distinct from the provision of non-life insurance products. The Transaction leads to horizontally affected markets in relation to life insurance.

Commission’s decisional practice

(18) As regards the product market definition for life insurance products, from a demand-side perspective the Commission distinguished between the following product categories: (i) pure risk protection products, (ii) pension products, and (iii) savings/investment products.

(19) In certain decisions, the Commission also distinguished between life insurance for individuals and for group customers. Furthermore, a distinction between unit-linked life insurance products on the one hand and non-unit-linked life insurance products on the other hand was considered as well, depending on the product and country in question. In M.4701 – Generali / PPF Insurance Business, the Commission looked at unit-linked savings and investment products. In M.8257 – NN Group / Delta Lloyd, the Commission discussed a separate market for unit-linked insurance for certain pension products and savings and investment products.

12 Case M.9796 – Uniqa/Axa (Insurance, Asset Management and Pensions – Czechia, Poland and Slovakia), paragraph 7; Case M.9531 – Assicurazioni Generali/Seguradoras Unidas/AdvanceCare, paragraph 9; Case M.7478 – Aviva/Friends Life/Telenet, paragraph 23; Case M.6883 – Canada Life/Irish Life, paragraph 16.

13 Case M.9796 – Uniqa/Axa (Insurance, Asset Management and Pensions – Czechia, Poland and Slovakia), paragraph 7.

14 Case M.8257 – NN Group/Delta Lloyd, paragraphs. 108-115; Case M.6812 SPFI/Dexia, paras. 30-33.

15 Case M.8257 – NN Group/Delta Lloyd, paragraphs 78-81.

16 Case M.9531 – Assicurazioni Generali/Seguradoras Unidas/AdvanceCare, paragraph 9.

(20) The Transaction leads to horizontally affected markets in relation to life insurance.

(21) In previous decisions, the Commission distinguished between three broad categories of insurance products: (i) life insurance, (ii) non-life insurance and (iii) reinsurance. The Commission also considered the definition of a downstream market for insurance distribution, upstream markets for asset management and pension administration, and considered assistance services as distinct from the provision of non-life insurance products. The Transaction leads to horizontally affected markets in relation to life insurance.

(22) In certain decisions, the Commission also distinguished between life insurance for individuals and for group customers. Furthermore, a distinction between unit-linked life insurance products on the one hand and non-unit-linked life insurance products on the other hand was considered as well, depending on the product and country in question. In M.4701 – Generali / PPF Insurance Business, the Commission looked at unit-linked savings and investment products. In M.8257 – NN Group / Delta Lloyd, the Commission discussed a separate market for unit-linked insurance for certain pension products and savings and investment products.

In M.9796 – Uniqa / Axa, a plausible market for index-linked and unit-linked life insurance was assessed for Slovakia.

(20) In some cases, the Commission has considered additional segmentations of the life insurance sector, including based on national insurance classifications.

(21) However, from a supply-side perspective, the Commission has recognised that the conditions for the provision of life insurance covering different risk types are quite similar and most large insurance companies are active in several risk types, which suggests that many different types of life insurance could be included in the same relevant product market.

(22) In past practice, the Commission considered health insurance as a potential separate market within non-life insurance. In previous decisions, the Commission further took specifics of national health insurance markets into account. Specifically for Belgium, it considered a separate market for accident and health insurance without further segmentation. With respect to Ireland, the Commission defined and assessed a separate market for health insurance without further segmentation.

(23) The Commission has ultimately always left open the definition of the relevant product market for life insurance.

Notifying Party’s submissions

(24) The Notifying Party argues that the relevant product market is the market for savings and investment products and that the latter should not be segmented further.

(25) The Notifying Party explains that under the national legal framework implementing the Solvency II Directive (i.e. the Greek Insurance Act) and according to decisional practice of the Hellenic Competition Council (“HCC”), health insurance is included in the segment of pure risk protection products and therefore in the overall life insurance market.

Commission’s assessment

(26) The market investigation provided evidence confirming the Notifying Party’s claim that a further sub-segmentation of the life insurance market may not be relevant in the case of the Greek insurance sector. The overwhelming majority of competitors responding to the market investigation indicated that most insurers offer all types of life insurance, and that therefore competition would primarily take place at the overall level of life insurance.

(27) Similarly, customers of pure risk protection group life insurance in Greece that provided an opinion on this question in the market investigation considered that competition takes place primarily on the overall pure risk protection life insurance market, and not at the level of individual risk types (e.g. health, credit, term-life and whole-life).

(28) As regards a potential segmentation of savings and investment life insurance products into unit-linked and non-unit linked products, the Commission notes that the Parties’ activities only overlap in the provision of unit-linked policies. For the purposes of this Decision, the Commission will assess an overall market for savings and investment life insurance products, as well as a plausible sub-segment of such unit-linked products.

(29) In any event, for the purposes of the present decision, the exact scope of the product market definition for the supply of life insurance products can be left open, since the Transaction does not raise serious doubts as to its compatibility with the internal market under any of the plausible product market definitions discussed in section (A) above.

(30) Specifically concerning the inclusion of health insurance in the market of pure risk protection life insurance products, the Commission notes that it has assessed further potential segments of this market separately, including a potential segment for health insurance as part of non-life insurance. The Commission also notes that neither of the Parties is active in non-life insurance in Greece. The market investigation has given no indication that health insurance would be separate from overall life insurance in Greece. Therefore, the issue of whether health insurance is part of life-insurance or of non-life insurance can be left open in the present case.

4.2.1.2Geographic market definition

(31) The Commission typically considered that the sector for life insurance products and its segments are likely to be national in scope, as a result of national distribution channels, established market structures, fiscal constraints and specific regulatory systems among Member States.

(32) The Notifying Party does not contest the Commission’s previous findings.

(33) The Commission’s market investigation did not reveal any reason to depart from its decisional practice in the present case. Therefore, life and health insurance products and its segments are national in scope.

4.2.2Pension products - Private group pension insurance (Greece)

Product market definition

(A) Description of the Greek pensions’ system

(34) The pension system in Greece is based on three 'pillars': (i) Pillar I, public social pension insurance – a mandatory publicly managed PAYG (pay-as-you-go) system; Pillar II, private occupational pension insurance – supplementary, voluntary pensions managed by private professional funds; and (iii) Pillar III, private group pension insurance – supplementary, voluntary pensions managed by private insurance companies with a license for provision of life insurance products.

(35) The Notifying Party submits that in Greece, unlike in many other countries, the second and third pillars of the pension system (i.e. the private voluntary pension insurance) are not well-developed. The current pension system is to a very significant extent based on Pillar I.

(36) The Parties' activities with respect to pension products in Greece only overlap in Pillar III.

(37) Within Pillar III of the Greek pension system, Greek life insurance providers offer group pension fund products (also referred to as Deposit Administration Fund ("DAF") contracts). DAF contracts are group pension fund plans where the contributions made are held in a special fund and managed by the insurer. Such contracts are offered only on a group basis and are typically entered into by employers for the benefit of employees. The contract of the group policy governs the rights of the employees to participate in the pension scheme, the amount and frequency of contributions and who is responsible for paying them (the employees, the employer or both), as well as the minimum retirement age and conditions of an early withdrawal, if any. The pension benefits are paid either in case of termination of employment or after reaching a retirement age provided for in the contract.

(38) Under Greek law, DAF assets are held in separate deposit administration funds maintained by the insurance provider. Additionally, DAF contracts offer certain tax advantages, since contributions paid by employees and by employers on behalf of employees are excluded from the calculation of the taxable income and pension benefits are taxed independently. Therefore, these products can be distinguished from “regular” savings and investment products with a profit-sharing mechanism or with investment returns.

(39) DAF contracts may be offered in the form of (i) defined contribution pension plans or (ii) defined benefit pension plans.

(40) In the case of plans offered on a defined benefit basis, the benefit is defined in the contract on the basis of factors such as the employee's salary and life tables. In defined benefit plans, the contribution is not predefined, but is recalculated annually through an actuarial valuation study.

(41) In the case of plans offered on a defined contribution basis, the contribution is defined in the contract as a percentage of the employee's salary, and the benefit is not predefined but calculated on the basis of the accumulated amount of contributions plus any investment returns.

(42) A further distinction can also be made (i) between accumulation versus decumulation products; and (ii) between products with fixed annuities (guaranteeing the payment of a certain regular amount) versus products with variable annuities (with no guaranteed level of benefits).

Notifying Party’s submissions

(43) The Notifying Party submits that for a number of years, DAF policies offered on the Greek market are predominantly defined contribution policies. Since the interest of companies for defined benefit DAF policies is negligible such policies are not currently offered on the Greek market. Thus, the Notifying Party submits that for an assessment of competitive dynamics with respect to DAF, a sub-segmentation between defined benefit and defined contribution policies is irrelevant.

(44) Moreover, the Notifying Party considers that any further sub-segmentation of DAF into (i) accumulation versus decumulation products and into (ii) products with variable annuities versus products with fixed annuities is not appropriate. Firstly, in the Greek market DAF policies are offered with fixed annuities and/or with an option for a lump sum withdrawal. Secondly, no stand-alone decumulation DAF products and no DAF policies with variable annuities are offered on the Greek market. Finally, there is no overlap between the Parties with respect to DAF policies with annuities, since there are no DAF policies with an annuity option in NN Greece's existing portfolio.

(45) Consequently, the Notifying Party concludes that it is not necessary to further sub-segment DAF in the context of the proposed transaction, because there is no active overlap between the Parties with regard to DAF and because such sub-segmentations are not relevant in the context of the Greek market.

(46) The Notifying Party also submits that occupational pension funds within Pillar II exert a competitive pressure on DAF products.

Commission’s assessment

(47) In responses to the market investigation competitors of the Parties confirmed that DAF group pension fund products are mainly accumulation, fixed annuity products. For example one competitor said that “…Accumulation products dominate the Greek Market…”.

Moreover, the Commission notes that the majority of both competitors and customers of the Parties consider that Pillar II products and Pillar III products closely compete with each other and therefore can be seen as belonging to the same market. For example one competitor said that “…The way that the Greek Insurance market works Pillar II ( OPFs ) and Pillar III ( Group Life Saving and Investment products ) although with different tax incentives, compete with each other…”. A customer concluded that “…We consider that the products offered under the two Pillars belong to the same market…”.

In any event, the Commission considers that, for the purposes of the present decision, the exact scope of the product market definition for the supply of pension products in Greece (that is if there is an overall market, composed of Pillars II and III, or if each of Pillars II and III is a separate market) can be left open, since the Transaction does not raise serious doubts as to its compatibility with the internal market under any plausible product market definition.

4.2.2.2Geographic market definition

The Commission typically considered that the sector for pension products are likely to be national in scope, as a result of national distribution channels, established market structures, fiscal constraints and specific regulatory systems among Member States.

The Notifying Party does not contest the Commission’s previous findings.

The Commission’s market investigation did not reveal any reason to depart from its decisional practice in the present case. Therefore, DAF products in Greece are national in scope.

4.2.3Pension products – Open pension funds (Poland)

Product market definition

(A) Commission’s decisional practice

As discussed in a recent Commission decision, the Polish pension system has a relatively complex and unique structure. Since 1999, it has had three pillars, each based on different types of pension. The first two pillars are based upon mandatory contributions from salaries.

The second pillar was initially run by open pension funds (“OFE”, Polish: otwarte fundusze emerytalne). These are independent legal entities created and managed by a joint stock company that needs to obtain a permission from the Insurance and Pension Funds Supervisory Commission. The system was significantly reformed in 2013. Pursuant to this reform, contributions of OFE participants (previously allocated to open pension funds only) were allocated towards the first pillar (unless the account holder decided to keep a part in the open pension fund). As a result, the market for OFEs decreased by nearly one half.

Additionally, in 2019, the government announced a plan to liquidate the OFE system in its current form by transferring the remaining savings from OFEs either to the first pillar, or to personal voluntary schemes. The market investigation in the recent case referred to in paragraph (52) above confirmed that the importance of open pension funds is diminishing, and that they will ultimately be liquidated and cease to exist.

The Commission has previously not concluded on the exact market definition of the Polish pension system. In the recent case referred to above, the market investigation had indicated that obligatory pensions (pillars one and two) and voluntary pensions (pillar three) form two separate product markets, but the Commission ultimately left the market definition open.

Notifying Party’s submissions

The Notifying Party does not contest the Commission’s previous findings.

Commission’s assessment

The Commission’s market investigation did not reveal any reason to depart from its previous decisional practice in the present case and therefore it will consider the second pillar of the Polish pensions system in its analysis.

4.2.3.2Geographic market definition

In the past the Commission has considered that OFE pension products in Poland are national in scope.

The Notifying Party does not contest the Commission’s previous findings.

The Commission’s market investigation did not reveal any reason to depart from its decisional practice in the present case. Therefore, OFE pension products in Poland are national in scope.

4.2.4Reinsurance

4.2.4.1Product market definition

The Commission held in previous decisions that reinsurance consists in providing insurance cover to another insurer for some or all of the liabilities assumed under its insurance policies, in order to transfer risk from the insurer to the reinsurer. The Commission has considered a separate market for reinsurance (distinguished from the markets for the provision of life and non-life insurance) but has left open the question of whether the reinsurance market should be further segmented between life and non-life reinsurance.

The Notifying Party does not contest the Commission’s previous findings.

The Commission considers that, for the purposes of the present decision, the exact scope of the product market definition for the supply of reinsurance can continue to be left open, since the Transaction does not raise serious doubts as to its compatibility with the internal market under any plausible product market definition (reinsurance overall or subsegmentations for life and non-life reinsurance).

4.2.4.2Geographic market definition

The Commission has consistently held in its decisional practice that the relevant geographic market for reinsurance is worldwide in scope due to the need to pool risks on a global basis.

The Notifying Party does not contest the Commission’s previous findings.

The Commission’s investigation did not reveal any reason to depart from its previous decisional practice in the present case. Therefore, the Commission will consider reinsurance as worldwide in scope.

4.2.5Insurance distribution

4.2.5.1Product market definition

In previous cases, the Commission has analysed whether the market for insurance distribution comprises only outward distribution channels or whether it should also be considered to include the sales force and office networks of the insurer (that is to say direct sales). This question was ultimately left open. The Commission has also considered whether a distinction could be made between the markets for the distribution of life and non-life insurance products, but ultimately left open the relevant product market definitions as well as whether there was a potential separate market for insurance broking. With regard to (non-life) insurance broking, the Commission has considered that it is appropriate to define separate relevant product markets for the supply of commercial risk brokerage (i) by type of underlying risk, and (ii) at least for certain risk types, by customer type (namely for sales to large multinational customers).

The Notifying Party does not contest the Commission’s previous findings.

The Commission considers that, for the purposes of the present decision, the exact scope of the product market definition for the supply of insurance distribution can be left open, since the Transaction does not raise serious doubts as to its compatibility with the internal market under of the any plausible product market definitions discussed in paragraph 68 above.

4.2.5.2Geographic market definition

As regards the geographic scope of a potential market for insurance distribution, the Commission has previously considered insurance distribution to be national in scope but ultimately left the exact definition of the relevant geographic market open. For certain segments, in particular if they related to brokerage services in relation to large commercial or specialty risks, the Commission has considered such segments to be EEA-wide or worldwide in scope.

The Notifying Party does not contest the Commission’s previous findings.

The Commission’s investigation did not reveal any reason to depart from its previous approach in the present case. In any event, the Commission considers that, for the purposes of the present decision, the exact scope of the geographic market definition for the provision of insurance distribution can be left open between national, EEA-wide and worldwide, since the Transaction does not raise serious doubts as to its compatibility with the internal market under any plausible geographic market definition. The Commission nevertheless notes that for the case at hand which concerns distribution of life and health insurance products and of pension products in Greece, the most plausible geographic market definition is national (Greece)

Under Articles 2(2) and 2(3) of EUMR, the Commission must assess whether a proposed concentration would significantly impede effective competition in the internal market or in a substantial part of it, in particular through the creation or strengthening of a dominant position.

A concentration can entail horizontal effects. In this respect, in addition to the creation or strengthening of a dominant position, the Commission Guidelines on the assessment of horizontal mergers under EUMR (“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 (a) by eliminating important competitive constraints on one or more firms, which consequently would have increased market power, without resorting to coordinated behaviour (non-coordinated effects); and (b) by changing 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 (coordinated effects). Concentrations which, by reason of the limited market share of the undertakings concerned are not liable to impede effective competition may be presumed to be compatible with the internal market. An indication to this effect exists, in particular, where the market share of the undertakings concerned does not exceed 25 % either in the internal market or in a substantial part of it.

Furthermore, a concentration can entail vertical effects. The Commission Guidelines on the assessment of non-horizontal mergers under EUMR (the “Non- Horizontal Merger Guidelines”) also distinguish between two main ways in which non-horizontal mergers may significantly impede effective competition: (a) when they give rise to input and/or customer foreclosure (non-coordinated effects); and (b) when the merger changes the nature of competition in such a way that firms that previously were not coordinating their behaviour, are now more likely to coordinate to raise prices or otherwise harm effective competition (coordinated effects). The Non-Horizontal Merger Guidelines distinguish two types of foreclosure: (a) where the merger is likely to raise the costs of downstream rivals by restricting their access to an important input (input foreclosure) and (b) where the merger is likely to foreclose upstream rivals by restricting their access to a sufficient customer base

64Commission Guidelines on the assessment of horizontal mergers under the Merger Regulation, OJ C 31, 5 February 2004, paragraphs 5–18.

65Ibid, paragraph 22.

66Ibid, paragraph 18.

67Commission Guidelines on the assessment of non-horizontal mergers under the Merger Regulation, OJ C 265, 18 October 2008, paragraphs 6–25.

68Ibid, paragraphs 17-19.

This supports the Notifying Parties view that the combined market positions of the Parties have been declining in the past years.

Further, combined market share levels in each potential segment of the Greece life and health insurance market as laid out in Tables 1 and 2 above remain still moderate and do not exceed [30-40]%. This is also the case for a potential segment for health insurance, which, for the purpose of this decision, has been included in the Greek life insurance market. In all potential market segments, the merged entity faces a number of competitors with a significant market position.

Secondly, the Parties are not particularly close competitors in the Greek life and health insurance market or any potential segment thereof listed above, even though both companies are relatively strong in the segments health insurance and savings and investment products. Based on market shares, the Commission notes a certain complementarity in the sense that NN appears to be relatively stronger in the provision of individual life insurance, while MetLife Greece is relatively stronger in the provision of group life insurance.

The market investigation further confirmed that the Parties are not particularly close competitors. The large majority of competitors state that NN and MetLife compete in the Greek life and health insurance market, but there would be other insurers who would compete just as strongly / closely. No competitor responding to the market investigation considered the Parties to be particularly close competitors. Similarly, no customer of group pure risk protection life insurance products in Greece responding to the market investigation indicated that NN and MetLife are particularly close competitors in this market or any of its potential segments.

Thirdly, there will continue to be sufficient alternative competitors on the market that customers can switch to. The presence of suitable alternative competitors is confirmed by the market shares provided above (see also paragraph (79) of this Decision) and by the market investigation. Competitors responding to the market investigation rate at least two competitors at a comparable level as the Parties in terms of competitive strength (Ethniki and Eurolife), and attribute a considerable competitive strength to Generali / Axa and Interamerican. The large majority of competitors further submit that sufficient competitive pressure would be exercised on the merged entity by remaining competitors post-Transaction.

These findings were broadly confirmed by customers of group pure risk protection life insurance products in Greece responding to the market investigation, who rated the competitive strength of four competitors at comparable levels to those of the Parties. No customer of group pure life insurance products in Greece responding to the market investigation indicated that NN and MetLife are particularly close competitors in this market or any of its potential segments.

76Form CO, Tables 14 to 19 and 22 to 39.

77See replies to Q1 – Questionnaire to competitors – Greece, question 8.

78See replies to Q2, – Questionnaire to customers – Greece, question 8.

79See replies to Q1 – Questionnaire to competitors – Greece, question 6.

80See replies to Q1 – Questionnaire to competitors – Greece, question 7.

81See replies to Q2 – Questionnaire to customers – Greece, question 7.

Generalli/AXA, Eurolife, Allianz, Interamerican, Groupama and European Reliance).

Moreover, the Commission notes that [NN strategy for DAF products] (hence its [0-5]% in market share on a NWP basis in 2019 and 2020). Currently, the Notifying Party submits that NN's activities in this regard focus on managing a small closed-book portfolio.

Finally, the Notifying Party submits that it will continue to face competitive pressure, from occupational pension funds within Pillar II as well.

Competitors responding to the market investigation indicated that MetLife Greece is the strongest competitor in the DAF market. They also confirmed that Ethniki, Generalli/Axa, Eurolife and Groupama are stronger competitors of Metlife Greece than NN is. Moreover, their responses clearly indicated that enough competitive pressure will remain in the Greek DAF group pension fund products market after the Transaction. For example one competitor said that “…Post-transaction, there will remain enough credible competitors to exert pressure on the combined entity…”. Finally, none of the competitors that expressed a view believes that the Transaction would have a negative impact either on competition for the provision of DAF group pension fund products in Greece.

In the same vain, customers of the Parties indicated that they consider Generali/Axa, Ethniki and Intramerican as stronger competitors to MetLife Greece than NN is. Customers also consider that there will be sufficient competitors left after the Transaction for the provision of DAF group pension fund products in Greece. Finally, all customers also consider that the Transaction would not have a negative impact either on competition for the provision of DAF group pension fund products in Greece, or on themselves.

76Form CO, Tables 14 to 19 and 22 to 39.

In light of the above considerations, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market or the functioning of the EEA agreement as a result of a horizontal effects in the market for DAF group pension fund products in Greece.

4.4.1.3Pension products in Poland

The following section focusses on OFE pension products in Poland. The Parties are active only in this segment of the Greek pensions market, which is the only market affected by the Transaction

92For the sake of completeness the Notifying Party notes that if a potential (existing) customer approaches NN and requests a DAF product, NN will [Descrition of NN sales policy and strategy for DAF products], see Form CO fn 292.

93See replies to question 5, Q3 - Questionnaire to competitors – Poland.

94See replies to question 6, Q3 - Questionnaire to competitors – Poland.

shares above this increment. The Commission also notes that Allianz will acquire the joint venture Aviva has with Santander for OFE’ in Poland., Thus, Aviva’s total market share would be around [20-30]% on an AuM basis and [20-30]% by the number of participants.

Competitors of the Parties in OFEs in Poland largely supported the argument that by virtue of various consecutive reforms of the Polish pension system the importance of the OFEs is diminishing and OFEs will most probably ultimately be liquidated and cease to exist in the foreseeable future. For example one respondent said that “the importance of OFE funds is diminishing due to various pension reforms in Poland”. Another stated that “…The reform, which was implemented in 2014, banned acquisition of new clients to OFE and introduced so called “zipper mechanism”, which over time will liquidate all assets of Open Pension Fund (OFE). On the other side current government plans the transformation of Open Pension Fund (OFE), what will probably contribute to faster liquidation of current system…”.

The Commission notes that competitors of the Parties believe that there will remain enough competitive pressure in the Polish OFE pension product market after the Transaction. One competitor said that “… After transaction there still will be 8 competing OFEs, which still should ensure enough competition, especially if we take into consideration that there is no active acquisition of new clients to OFE by any of PTE’s…”,. Another stressed that “… OFE pensions product market is diminishing with OFE likely to be ultimately liquidated. Acquisition of new clients is very limited and the competition focused on investment performance. As the investment performance bonus as set out in the pensions legislation depends on relative performance versus other OFEs and as there is still number of other OFEs in the market, the transaction is not going to change this main competitive incentive…”.

Finally, competitors of the Parties believe that the Transaction will have no impact on competition for the provision of OFE pension products in Poland. As one respondent put it “Open Pension Fund product is not actively sold. Open pension fund market is highly regulated and fees for the clients should not be influenced by the merger.”

In light of the above considerations, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market or the functioning of the EEA agreement as a result of a horizontal effects in the market for pension products? in Poland.

4.4.2Vertical relationships

4.4.2.1Reinsurance (upstream) and life insurance in Greece and pension products in Greece and Poland (downstream)

On the upstream, NN is active in reinsurance with a market share below 1% (worldwide), while MetLife Greece and MetLife Poland are not. The merged entity would not have any ability for input foreclosure due to marginal upstream market shares.

99Case M.10326 – Allianz Holding/Santander/Aviva Companies/Santander Aviva Companies.

100See replies to question 5, Q3 - Questionnaire to competitors – Poland.

On the downstream markets the combined market shares of the Parties are above 30% in five segments of life insurance in Greece (namely in life and health insurance overall ([30-40%]), life and health insurance – individual policies ([30-40%]), life and health insurance – group policies ([30-40%]), pure (risk) protection products for whole and term life insurance ([30-40%]) and savings and investment products ([30-40%]), [30-40%] in pension products in Greece and [30-40%] in pension products in Poland.

Given that reinsurance is provided on a global basis for various types of insurance, the markets listed in the previous paragraph account only for a very small part (below 1%) of the overall customer base for reinsurance services.

Therefore, upstream competitors of the Parties in reinsurance will continue to have a large number of customers worldwide to provide their reinsurance services to, should the merged entity choose to procure for its reinsurance needs in-house. Moreover, no responding competitor, or customer, indicated that the Transaction would have a negative impact on the market for reinsurance worldwide.

For the above reasons, the Commission considers that the Transaction does not raise serious doubts as to its compatibility with the internal market as regards the vertical links between the upstream market for reinsurance worldwide and the downstream markets for life insurance in Greece and pension products in Greece and Poland.

4.4.2.2Life insurance and pension products (upstream) and insurance distribution in Greece (downstream)

On the upstream markets, the combined market shares of the Parties are above 30% in five segments of life insurance (namely in life and health insurance overall ([30-40%]), life and health insurance – individual policies ([30-40%]), life and health insurance – group policies ([30-40%]), pure (risk) protection products for whole and term life insurance ([30-40%]) and savings and investment products ([30-40%]), and [30-40%] in pension products.

On the downstream market for insurance distribution in Greece, the Parties do not distribute the insurance products of their competitors. Therefore there is no risk of customer foreclosure.

Regarding distribution of their own products, NN does so through exclusive channels – tied agents ([70-80]%) and an exclusive cooperation with [Name of Bank] ([20-30%]), while MetLife Greece does so through tied agents ([40-50]%) and direct sales ([30-40%]). So, less than 20% of its sales are through non-exclusive third-party channels (brokers and non-exclusive cooperation with banks).

102See replies to Q1 – Questionnaire to competitors - Greece, questions 11 and 19, Q2 – Questionnaire to customers - Greece, questions 12 and 20 and Q3 – Questionnaire to customers - Poland question 8.

103Form CO, table 42.

104Form CO, table 43.

The Notifying Party submits that the merged entity would not be able to pursue a strategy of input foreclosure vis-à-vis their own third party distributors by internalising the small part of their life insurance and pension products which is hitherto distributed via non-exclusive third-party channels, given the Parties combined position and remaining strong competitors post-Transaction on the upstream markets.

The Commission observes that in the upstream market of insurance the merged entity’s shares remain moderate (30-39%) and that in each plausible market a number of credible insurance providers will remain. Moreover, no responding competitor, or customer indicated that the Transaction would have a negative impact on the market for insurance distribution in Greece.

For the above reasons, the Commission considers that the Transaction does not raise serious doubts as to its compatibility with the internal market as regards the vertical links between the upstream markets for life insurance and pension products in Greece and the downstream market for insurance distribution in Greece.

5.CONCLUSION

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 EUMR and Article 57 of the EEA Agreement.

For the Commission

(Signed) Margrethe VESTAGER Executive Vice-President

105See replies to Q1 – Questionnaire to competitors - Greece, questions 11 and 19 and Q2 – Questionnaire to customers - Greece, questions 12 and 20.

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