Thursday, 1st May 2008
Modernisation of the EC Competition Law regime - impact on the International Group Agreement
There has been recent speculation in the press about the status of the International Group Agreement ("IGA") after 2009. There may also be some confusion regarding the relevance to the International Group Agreement of the Insurance Block Exemption Regulation (the "Block Exemption"). The European Commission recently launched a public consultation to assist in determining whether or not the Block Exemption should be renewed on its expiry in March 2010. This summary is intended to clarify the current position and the position going forward. The IGA benefits from a decision of the European Commission granting it exemption under Article 81(3) of the EC Treaty (relating to competition rules). The European Commission first granted an exemption for the IGA in 1985, following a notification by the International Group. The current exemption was granted by the European Commission in 1999, again following a request by the International Group, and continues until 20 February 2009. With effect from 1 May 2004, a new EC Competition Law regime has been in force. The new regime changes the procedures by which Article 81 of the EC Treaty is applied and enforced, but does not change the substance of Article 81. The main features of the new regime are that the procedures for notifying agreements to the European Commission in order to obtain an exemption have been abolished and that exemption now applies "automatically" to any agreement that meets the criteria of Article 81 (3) without the need for notification to, or decision by, the European Commission. Under the new regime, businesses make their own assessment as to whether their arrangements are compatible with Article 81. From the perspective of the International Group, the effect of the new regime means that, in practice, as from the expiry of the existing exemption in February 2009, the IGA may be expected to benefit "automatically" from exemption under Article 81 as long as there are no material changes in the way in which the Group is structured and operates and there are no major changes in the basic structure of the P&I; market. At present the International Group submits a report annually to the European Commission on relevant developments and expects to continue to do that after 2009. In light of recent press reports, the Group has been in contact with the European Commission, which has confirmed that that it is not presently reviewing any complaints with regard to the operation of the exemption or the Group arrangements or the IGA, nor does it intend to review the status of the International Group's individual exemption. The Block Exemption regulation is entirely separate and distinct from the individual exemption granted to the IGA. It is of general application to certain specified types of insurance co- operation and collaboration arrangements, providing them with a "safe harbour" from the competition rules. The European Commission questioned the continued usefulness of the Block Exemption during its recent sector inquiry into business insurance. The European Commission is now carrying out a public consultation process focused solely on the Block Exemption regulation. This does not include any review or consultation in relation to the individual exemption granted to the IGA.