Regulator will not take legal action against insurers following investigation

CCPC says it could not have prosecuted firms as investigation was civil, not criminal

CCPC staff began the investigation in 2016. The commission issued preliminary findings last September saying that all parties had breached competition law. Photograph: Alan Betson

CCPC staff began the investigation in 2016. The commission issued preliminary findings last September saying that all parties had breached competition law. Photograph: Alan Betson

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The competition regulator has agreed not to take legal action against motor insurers who pledged to boost compliance following an investigation into suspected price manipulation.

Insurers AIG, Allianz, Axa, Aviva, FBD and broker AA Ireland made legally-binding agreements with the Competition and Consumer Protection Commission (CCPC) to overhaul their internal compliance.

Copies of the agreements show that, in return, the commission will end its investigation of each business and refrain from taking legal action under the Competition Act, as long as the companies continue honouring their deals.

According to the CCPC, it could not have prosecuted the companies, as its investigation was civil rather than criminal. Instead it could have sought a court declaration that the insurers had breached competition law, and got an order compelling them to end the practices that led to the investigation.

The commission explained that, considering the cost of taking the parties to court, which would have resulted in a similar outcome, and that the companies had ended the practices under investigation as well as pledging to improve compliance, it decided against legal action.

The Competition (Amendment) Bill, 2021, which could become law by the end of the year, will give the commission the power to fine companies following civil investigations.

Insurance industry representative body Brokers Ireland will not face court, even though it refused to sign the same deal as the companies. Its chief executive, Diarmuid Kelly, said this week that the CCPC had failed to find any competition law breaches by the Irish Brokers’ Association, which his organisation took over in 2017.

The CCPC said it considered taking legal action against the brokers. However, in light of the regulator’s current powers, and the fact that it had secured a compliance deal from most of the motor insurance industry, it believed that this would not have resulted in a significantly different outcome.

Investigation

Regulators investigated suspected “price signalling”. This is where rival companies let each other know in advance that they are increasing charges, potentially prompting further price hikes across their industry.

Detailed public announcements by motor insurers of pending price increases in 2015 and 2016 sparked the inquiry. All the companies denied that they had engaged in anti-competitive behaviour.

The six businesses have agreed to appoint compliance officers who will investigate potential breaches of competition law and report to their boards. They must also put in place internal systems to detect any likely infringements.

In addition, they must provide protection for whistle-blowers who come forward with details of suspected breaches, have staff training and make regular compliance reports to the CCPC showing that they abiding by their agreements’ terms.

They must also give the commission any information it considers necessary at any time to ensure they are meeting their obligations.

The agreements state that they are binding and enforceable by either party in any court in the State.

CCPC staff began the investigation in 2016. The commission issued preliminary findings last September saying that all parties had breached competition law. The companies denied this while Brokers Ireland responded with a detailed rebuttal.

The commission obtained and analysed more than 1.4 million emails and documents from the parties in the course of the inquiry, while it held 55 witness hearings.

Brian McHugh, commission member responsible for competition enforcement, predicted that the new law would strengthen its powers this year.

“We strongly advise businesses and trade associations in all sectors to ensure that they take steps to comply with competition law including putting in place robust compliance procedures,” he said.