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Document 52002XC0709(01)

Notice pursuant to Article 5 of Council Regulation (EEC) No 1534/91 of 31 May 1991 on the application of Article 81(3) of the EC Treaty to certain categories of agreements, decisions and concerted practices in the insurance sector (Text with EEA relevance)

OJ C 163, 9.7.2002, p. 7–16 (ES, DA, DE, EL, EN, FR, IT, NL, PT, FI, SV)

52002XC0709(01)

Notice pursuant to Article 5 of Council Regulation (EEC) No 1534/91 of 31 May 1991 on the application of Article 81(3) of the EC Treaty to certain categories of agreements, decisions and concerted practices in the insurance sector (Text with EEA relevance)

Official Journal C 163 , 09/07/2002 P. 0007 - 0016


Notice pursuant to Article 5 of Council Regulation (EEC) No 1534/91 of 31 May 1991 on the application of Article 81(3) of the EC Treaty to certain categories of agreements, decisions and concerted practices in the insurance sector

(2002/C 163/06)

(Text with EEA relevance)

In accordance with Article 5 of Council Regulation (EEC) No 1534/91, the Commission invites interested parties to send their comments concerning the draft Commission Regulation (EC) published below on the application of Article 81(3) of the EC Treaty to certain categories of agreements in the insurance sector, no later than 30 September 2002, to: European Commission Directorate-General for Competition Unit D1, Office J 70 2/56 B - 1049 Brussels Fax (32-2) 296 98 07 E-mail: Steve.Ryan@cec.eu.int.

Draft Commission Regulation (EC) No .../...

of ...

on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices in the insurance sector

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EEC) No 1534/91 of 31 May 1991 on the application of Article 85(3) of the Treaty to certain categories of agreements, decisions and concerted practices in the insurance sector(1), and in particular Article 1(1)(a), (b), (c) and (e) thereof,

Having published a draft of this Regulation(2),

Having consulted the Advisory Committee on restrictive practices and dominant positions,

Whereas:

(1) Regulation (EEC) No 1534/91 empowers the Commission to apply Article 81(3) of the Treaty by regulation to certain categories of agreements, decisions and concerted practices in the insurance sector which have as their object cooperation with respect to:

- the establishment of common risk premium tariffs based on collectively ascertained statistics or the number of claims,

- the establishment of common standard policy conditions,

- the common coverage of certain types of risks,

- the settlement of claims,

- the testing and acceptance of security devices,

- registers of, and information on, aggravated risks.

(2) Pursuant to that Regulation, the Commission adopted Regulation (EEC) No 3932/92 of 21 December 1992 on the application of Article 85(3) of the Treaty to certain categories of agreements, decisions and concerted practices in the insurance sector(3). Regulation (EEC) No 3932/92, as amended by the Act of Accession of Austria, Finland and Sweden, expires on 31 March 2003.

(3) Regulation (EEC) No 3932/92, does not grant an exemption to agreements concerning the settlement of claims and registers of, and information on, aggravated risks. The Commission considered that it lacked sufficient experience in handling individual cases to make use of the power conferred by Regulation (EEC) No 1534/91 in those fields. This situation has not changed.

(4) On 12 May 1999, the Commission adopted a Report(4) to the Council and the European Parliament on the operation of Regulation (EEC) No 3932/92. On 15 December 1999, the Economic and Social Committee adopted an opinion on the Commission's report(5). On 19 May 2000, the Parliament adopted a Resolution on the Commission's report(6). On 28 June 2000, the Commission held a consultation meeting with interested parties, including representatives of the insurance sector and national competition authorities, on the Regulation.

(5) A new Regulation should meet the two requirements of ensuring effective protection of competition and providing adequate legal security for undertakings. The pursuit of these objectives should take account of the need to simplify administrative supervision and the legislative framework to as great an extent as possible. Account must also be taken of the Commission's experience in this field since 1992, and the results of the consultations on the 1999 Report and consultations during the legislative process leading up to the adoption of this Regulation.

(6) Regulation (EEC) No 1534/91 requires the exempting regulation of the Commission to define the categories of agreements, decisions and concerted practices to which it applies, to specify the restrictions or clauses which may, or may not, appear in the agreements, decisions and concerted practices, and to specify the clauses which must be contained in the agreements, decisions and concerted practices or the other conditions which must be satisfied.

(7) Nevertheless, it is appropriate to move away from the approach of listing exempted clauses and to place greater emphasis on defining categories of agreements which are exempted up to a certain level of market power and on specifying the restrictions or clauses which are not to be contained in such agreements. This is consistent with an economics based approach which assesses the impact of agreements on the relevant market. However, it should be recognised that in the insurance sector there are certain types of collaboration involving all the undertakings on a relevant insurance market which can be regarded as normally satisfying the conditions laid down in Article 81(3).

(8) For the application of Article 81(3) by regulation, it is not necessary to define those agreements which are capable of falling within Article 81(1). In the individual assessment of agreements under Article 81(1), account has to be taken of several factors, and in particular the market structure on the relevant market.

(9) The benefit of the block exemption should be limited to those agreements for which it can be assumed with sufficient certainty that they satisfy the conditions of Article 81(3).

(10) Collaboration between insurance undertakings or within associations of undertakings in the compilation of statistics on the number of claims, the number of individual risks insured, total amounts paid in respect of claims and the amount of capital insured makes it possible to improve the knowledge of risks and facilitates the rating of risks for individual companies. The same applies to their use to establish indicative pure premiums or, in the case of insurance involving capitalisation, frequency tables. Joint studies on the probable impact of extraneous circumstances that may influence the frequency or scale of claims, or the yield of different types of investments, should also be included. It is, however, necessary to ensure that the restrictions are only exempted to the extent to which they are necessary to attain these objectives. It is therefore appropriate to stipulate that concerted practices on commercial premiums - that is to say, the premiums actually charged to policyholders, comprising an element to cover administrative, commercial and other costs, plus a loading for contingencies or profit margins - are not exempted, and that even indicative pure premiums can serve only for reference purposes. Insofar as the joint calculation of indicative pure premiums and joint carrying-out of studies do not extend to the commercial premiums charged to policyholders and are of indicative nature, it can be expected that consumers will benefit from larger choice of suppliers given that market entry and the presence of a wider number of competitors on the market are facilitated.

(11) Moreover, the broader the categories into which statistics gathered for the purposes of calculating pure premiums are grouped, the less leeway insurance undertakings have to calculate premiums on a narrower basis. It is therefore appropriate to limit the benefit of the block exemption to exchanges of statistics and joint calculation of indicative pure premiums to situations where the statistics used are grouped in the narrowest possible categories which are compatible with the inclusion in each category of a meaningful statistical sample.

(12) Furthermore, since access to such calculations of pure premiums, and studies related to indicative risk premiums, is necessary both for insurance undertakings active on the geographic or product market in question and also for those considering entering that market, such insurance undertakings must be granted access to such calculations and studies on reasonable and non-discriminatory terms, as compared with insurance undertakings already present on that market. Such terms might for example include a commitment from an insurance undertaking not yet present on the market to provide statistical information on claims, should it ever enter the market. They might also include membership of the association of insurers responsible for producing the calculations, as long as access to such membership is itself available on reasonable and non-discriminatory terms to insurance undertakings not yet active on the market in question. However, any fee charged for access to such calculations or related studies to insurance undertakings which have not contributed to them, would not be considered reasonable for this purpose if it were so high as to constitute a barrier to entry on the market.

(13) The reliability of jointly calculated pure premiums, and joint studies becomes greater as the amount of statistics on which they are based is increased. Insurers with high market shares may generate sufficient statistics internally to be able to calculate reliable pure premiums, but those with small market shares will not be able to do so, much less new entrants. The inclusion in such joint calculations and joint studies of information from all insurers on a market, including large ones, promotes competition by helping smaller insurers, and facilitates market entry. Given this specificity of the insurance sector, it is not appropriate to subject any exemption for such joint calculations and joint studies to market share thresholds.

(14) Standard policy conditions or standard individual clauses for direct insurance and standard models illustrating the profits of a life assurance policy are necessary for the calculation of indicative pure and risk premiums since these must be calculated with reference to certain policy conditions. However, standard policy conditions must not lead either to the standardisation of products or to the creation of a significant imbalance between the rights and obligations arising from the contract. Accordingly, the exemption should only apply to standard policy conditions developed and agreed in conjunction with the joint calculation of pure premiums and joint studies related to risk premiums, and only in so far they are both necessary and exclusively used for such calculations or studies. Furthermore, it should apply on condition: that they are not binding, and serve only as models.

(15) Standard policy conditions may not contain any systematic exclusion of specific types of risk without providing for the express possibility of including that cover by agreement and may not provide for the contractual relationship with the policyholder to be maintained for an excessive period or go beyond the initial object of the policy. This is without prejudice to obligations arising from Community or national law to include certain risks in certain policies.

(16) In addition, it is necessary to stipulate that the common standard policy conditions must be generally available to any interested person, and in particular to the policyholder, so as to ensure that there is real transparency and therefore benefit for consumers.

(17) The inclusion in an insurance policy of risks to which a significant number of policyholders is not simultaneously exposed may hinder innovation, given that the bundling of unrelated risks can be a disincentive for insurers to offer separate and specific insurance cover for them. A clause which imposes such comprehensive cover should therefore not be covered by the block exemption. Where there is a legal requirement on insurers to include in policies cover for risks to which a significant number of policyholders are not simultaneously exposed, then the inclusion in an indicative model contract of a standard clause reflecting such a legal requirement does not constitute a restriction of competition and falls outside the scope of Article 81(1).

(18) The establishment of co-insurance or co-reinsurance groups (often called "pools") designed to cover an unspecified number of risks does not restrict competition in the meaning of Article 81(1) of the Treaty if, in the absence of the group in question, none of the members of the group would be able to supply the category of insurance concerned (even if other insurers or groups of insurers do supply that category of insurance). Where the total subscription capacity of the group is greater than double the subscription capacity necessary to offer the category of insurance in question, with a level of cover sufficient to cover the risks concerned, then the group could be replaced by at least two competing groups, and therefore it may, depending on the level of market power, restrict competition within the meaning of Article 81(1).

(19) The establishment of such co-insurance or co-reinsurance groups also does not restrict competition in the meaning of Article 81(1) of the Treaty if, in the absence of the group in question, only one of the members of the group would be able to supply the category of insurance in question, unless the subscription capacity of all the other members of the group taken together would be sufficient to offer the category of insurance in question, with a level of cover sufficient to cover the risks concerned. In that case, the group could be replaced by one group and one individual insurer, competing with each other, and therefore the group may, depending on the level of market power, restrict competition within the meaning of Article 81(1).

(20) However, the establishment of any such co-insurance or co-reinsurance group may, depending on the level of market power, restrict competition within the meaning of Article 81(1) of the Treaty if, in the absence of the group in question, more than one of the members of the group would be able alone to supply the category of insurance in question.

(21) For new risks, where no historical information on claims exists, it is not possible to know in advance what subscription capacity is necessary to cover the risk, nor whether two or more co-insurance or co-reinsurance groups could coexist for the purposes of providing this type of insurance. A pooling arrangement for the insurance of such new risks can therefore be exempted for a limited period of time. Three years should constitute an adequate period for the constitution of sufficient historical information on claims to assess the necessity or otherwise of one single pool. This Regulation therefore grants an exemption to any such group which is newly created in order to cover a new risk, for the first three years of its existence.

(22) For risks which are not new, it is recognised that such co-insurance and co-reinsurance groups which involve a restriction of competition can also, in certain limited circumstances, involve benefits such as to justify an exemption under Article 81(3), even if they could be replaced by two or more competing insurance entities. They may for example, allow their members to gain the necessary experience of the sector of insurance involved, they may allow cost savings, or reduction of premiums through joint reinsurance on advantageous terms. However, any exemption for such groups is not justified if the group in question benefits from a significant level of market power, since in those circumstances the restriction of competition deriving from the existence of the pool would normally outweigh any possible advantages.

(23) This Regulation therefore grants an exemption to any such co-insurance or co-reinsurance group which has existed for more than three years, or which is not created in order to cover a new risk, on condition that the combined market shares of its members do not exceed the following thresholds: 25 % in the case of co-reinsurance groups, and 20 % in the case of co-insurance groups. The threshold for co-insurance groups is lower because the mechanism of co-insurance requires uniform policy conditions and commercial premiums, with the result that residual competition between members of a co-insurance group is particularly reduced.

(24) These exemptions however only apply if the group in question meets the further conditions laid out in Article 8 of the present Regulation, which are intended to keep to a minimum the restrictions of competition between the members of the group.

(25) Cooperation in the evaluation of security devices and of the undertakings installing and maintaining them is beneficial in so far as it removes the need for repeated individual evaluation. Accordingly, the Regulation should define the conditions under which the formulation of technical specifications and procedures for approving such security devices and the undertakings installing or maintaining them are exempted. The purpose of such conditions is to ensure that all manufacturers and installation and maintenance undertakings may apply for evaluation, and that the evaluation and approval are guided by objective and well-defined criteria, which may only relate to the performance of the devices and not to certain technologies to be used; as to installers or maintenance undertakings, only performance related criteria may be used.

(26) Ideally, standards or technical specifications for all matters relating to security devices, and their assessment, certification, installation, and maintenance, would exist at European level, thus ensuring harmonisation and coherence within the single market. Where such European-level standards or technical specifications exist, agreements at national level are unnecessary and cannot be covered by the block exemption.

(27) Where no such European-level standards or technical specifications exist, agreements between insurers laying down technical specifications or approval procedures that are used in one or several Member States should be exempted; however, experience has shown that differing national agreements among insurers on security devices or undertakings installing or maintaining security devices can make it difficult for policyholders to cover a certain risk if the security device or installer or maintenance undertaking used complies with the specifications or approval procedures set up by insurers of another Member State, but not with the specifications or approval procedures agreed by the insurers of the Member State where the risk is located. It is therefore appropriate to extend the benefit of the block exemption to any such national agreements only if they explicitly provide for the recognition of any other such national agreements and of the approval of a security device or an installer or maintenance undertaking in any other Member State.

(28) Lastly, any agreements on security devices must not result in an exhaustive list of approved devices; each undertaking must remain free to accept devices and installation and maintenance undertakings not approved jointly.

(29) If individual agreements exempted by this Regulation nevertheless have effects which are incompatible with Article 81(3), as interpreted by the administrative practice of the Commission and the case-law of the Court of Justice, the Commission may withdraw the benefit of the block exemption. This may occur in particular where studies on the impact of future developments are based on unjustifiable hypotheses; or where recommended standard policy conditions contain clauses which create, to the detriment of the policyholder, a significant imbalance between the rights and obligations arising from the contract; or where groups are used or managed in such a way as to give one or more participating undertakings the means of acquiring or reinforcing a position of significant market power on the relevant market, or if these groups result in market sharing.

(30) In order to facilitate the conclusion of agreements, some of which can involve significant investment decisions, the period of validity of this Regulation should be fixed at 10 years.

(31) This Regulation is without prejudice to the application of Article 82 of the Treaty.

(32) In accordance with the principle of the primacy of Community law, no measure taken pursuant to national laws on competition should prejudice the uniform application throughout the common market of the Community competition rules or the full effect of any measures adopted in implementation of those rules, including this Regulation,

HAS ADOPTED THIS REGULATION:

CHAPTER I

EXEMPTION AND DEFINITIONS

Article 1

Exemption

Pursuant to Article 81(3) of the Treaty and subject to the provisions of this Regulation, it is hereby declared that Article 81(1) of the Treaty shall not apply to agreements entered into between two or more undertakings in the insurance sector (hereinafter referred to as "the parties" and which relate to the conditions under which the parties seek or achieve cooperation with respect to:

(a) the joint calculation of indicative pure premiums or the establishment and distribution of mortality tables, and tables showing the frequency of illness, accident and invalidity, in connection with insurance involving an element of capitalisation;

(b) the joint carrying-out of studies for the purposes of determining indicative risk premiums, and the distribution of their results;

(c) the joint establishment and distribution of non-binding policy conditions for direct insurance which are developed and agreed in conjunction with the calculations and/or studies referred to in Article 1(a) and (b) above and only in so far they are both necessary and exclusively used for such calculations or studies;

(d) the joint establishment and distribution of non-binding models illustrating the profits to be realised from an insurance policy involving an element of capitalisation;

(e) the setting-up and operation of groups of insurance undertakings or of insurance undertakings and reinsurance undertakings for the common coverage of a specific category of risks in the form of co-insurance or co-reinsurance; and

(f) the establishment, recognition and distribution of:

- technical specifications for security devices,

- procedures for assessing and approving the compliance of security devices with such specifications,

- rules or codes of practice for the installation and maintenance of security devices, and

- rules for the evaluation and approval of undertakings which install or maintain security devices.

Article 2

Definitions

For the purposes of the present Regulation, the following definitions shall apply:

1. "Agreement" means an agreement, a decision of an association of undertakings or a concerted practice.

2. "Participating undertakings" means undertakings party to the agreement and their respective connected undertakings.

3. "Connected undertakings" means:

(a) undertakings in which a party to the agreement, directly or indirectly:

(i) has the power to exercise more than half the voting rights; or

(ii) has the power to appoint more than half the members of the supervisory board, board of management or bodies legally representing the undertaking; or

(iii) has the right to manage the undertaking's affairs;

(b) undertakings which directly or indirectly have, over a party to the agreement, the rights or powers listed in (a);

(c) undertakings in which an undertaking referred to in (b) has, directly or indirectly, the rights or powers listed in (a);

(d) undertakings in which a party to the agreement together with one or more of the undertakings referred to in (a), (b) or (c), or in which two or more of the latter undertakings, jointly have the rights or powers listed in (a);

(e) undertakings in which the rights or the powers listed in (a) are jointly held by:

(i) parties to the agreement or their respective connected undertakings referred to in (a) to (d); or

(ii) one or more of the parties to the agreement or one or more of their connected undertakings referred to in (a) to (d) and one or more third parties.

4. "Risk premium" means the estimated cost of covering a specified risk in the future, to the exclusion of any administrative or commercial costs or fiscal or parafiscal contributions, and not taking into account either revenues from investments or anticipated profits.

5. "Pure premium" means the average cost of covering a specified risk in the past, to the exclusion of any administrative or commercial costs or fiscal or parafiscal contributions, and not taking into account revenues from investments nor anticipated profits.

6. "Standard policy conditions" refers to any clauses contained in model or reference insurance policies prepared jointly by insurers or by bodies or associations of insurers.

7. "Co-insurance groups" means groups set up by insurance undertakings which:

- agree to underwrite in the name and for the account of all the participants the insurance of a specified risk category, or

- entrust the underwriting and management of the insurance of a specified risk category in their name and on their behalf to one of the insurance undertakings, to a common broker or to a common body set up for this purpose.

8. "Co-reinsurance groups" means groups set up by insurance undertakings, possibly with the assistance of one or more reinsurance undertakings:

- in order to reinsure mutually all or part of their liabilities in respect of a specified risk category,

- incidentally, to accept in the name and on behalf of all the participants the reinsurance of the same category of risks.

9. "New risk" means a risk for which no historical information on claims exists which could be used to calculate pure premiums.

10. "Security devices" refers both to components and equipment designed for loss prevention and reduction, and to systems formed from such elements.

CHAPTER II

JOINT CALCULATION OF INDICATIVE PURE PREMIUMS AND CARRYING OUT OF STUDIES

Article 3

Conditions for exemption

The exemptions provided for in Article 1(a) and (b) shall apply on condition that:

(a) all indicative pure premiums and tables are based on the assembly of data, spread over a number of risk-years chosen as an observation period, which relate to identical or comparable risks in sufficient number to constitute a base which can be handled statistically and which will yield figures on (inter alia):

- the number of claims during the said period,

- the number of individual risks insured in each risk-year of the chosen observation period,

- the total amounts paid or payable in respect of claims arisen during the said period,

- the total amount of capital insured for each risk-year during the chosen observation period;

(b) the calculations, tables or study results, when compiled and distributed, include a statement that they are purely illustrative;

(c) the calculations tables or study results do not include in any way elements for contingencies, income deriving from reserves, administrative or commercial costs;

(d) the calculations, tables or study results do not identify the insurance undertakings concerned;

(e) in the calculations or tables the statistics are grouped in the narrowest possible categories which are compatible with the inclusion in each category of a meaningful statistical sample;

(f) the calculations, tables or study results are made available on reasonable and non-discriminatory terms, to any insurance undertaking which requests a copy of them, including insurance undertakings which are not active on the geographical or product market to which those calculations, tables or study results refer;

(g) that the studies concern only the probable impact of general circumstances external to the interested undertakings on the frequency or scale of claims, or the profitability of different types of investment.

Article 4

Agreements not covered by the exemption

The exemption provided for in Article 1 shall not apply where participating undertakings enter into an undertaking or commitment among themselves, or oblige other undertakings, not to use calculations or tables that differ from those established pursuant to Article 1(a), or not to depart from the results of the studies referred to in Article 1(b).

CHAPTER III

NON-BINDING STANDARD POLICY CONDITIONS FOR DIRECT INSURANCE AND MODELS

Article 5

Conditions for exemption

1. The exemption provided for in Article 1(c) shall apply on condition that the standard policy conditions:

(a) are established and distributed with an explicit statement that they are non-binding;

(b) expressly mention that participating undertakings are free to offer different policy conditions to their customers; and

(c) are accessible to any interested person and provided simply upon request.

2. The exemption provided for in Article 1(d) shall apply on condition that the non-binding models are established and distributed only by way of guidance.

Article 6

Agreements not covered by the exemption

1. The exemption provided for in Article 1(c) shall not apply where the standard policy conditions contain clauses which:

(a) impose comprehensive cover including risks to which a significant number of policyholders are not simultaneously exposed, without prejudice to legally imposed obligations;

(b) indicate the amount of the cover or the part which the policyholder must pay himself ("the excess");

(c) allow the insurer to maintain the policy in the event that he cancels part of the cover, increases the premium without the risk or the scope of the cover being changed (without prejudice to indexation clauses), or otherwise alters the policy conditions without the express consent of the policyholder;

(d) allow the insurer to modify the term of the policy without the express consent of the policyholder;

(e) impose on the policyholder in the non-life assurance sector a contract period of more than three years;

(f) impose a renewal period of more than one year where the policy is automatically renewed unless notice is given upon the expiry of a given period;

(g) require the policyholder to agree to the reinstatement of a policy which has been suspended on account of the disappearance of the insured risk, if he is once again exposed to a risk of the same nature;

(h) require the policyholder to obtain cover from the same insurer for different risks;

(i) require the policyholder, in the event of disposal of the object of insurance, to make the acquirer take over the insurance policy;

(j) exclude or limit the cover of a risk if the policyholder uses security devices, or installing or maintenance undertakings, which are compatible with the relevant specifications agreed by an association or associations of insurers in one or several other Member States or at the European level.

2. The exemption provided for in Article 1(c) shall not benefit undertakings or associations of undertakings which agree, or agree to oblige other undertakings, not to apply conditions other than standard policy conditions established pursuant to an agreement between the participating undertakings.

3. Without prejudice to the establishment of specific insurance conditions for particular social or occupational categories of the population, the exemption provided for in Article 1(c) shall not apply to agreements decisions and concerted practices which exclude the coverage of certain risk categories because of the characteristics associated with the policyholder.

4. The exemption provided for in Article 1(d) shall not apply where, without prejudice to legally imposed obligations, the non-binding models include only specified interest rates or contain figures indicating administrative costs.

5. The exemption provided for in Article 1(d) shall not benefit undertakings or associations of undertakings which concert or undertake among themselves, or oblige other undertakings, not to apply models illustrating the benefits of an insurance policy other than those established pursuant to an agreement between the participating undertakings.

CHAPTER IV

COMMON COVERAGE OF CERTAIN TYPES OF RISKS

Article 7

Market share threshold and duration of exemption

1. As concerns co-insurance or co-reinsurance groups which are newly created in order to cover a new risk, the exemption provided for in Article 1(e) shall apply for a period of three years from the date of the first establishment of the group, regardless of the market share of the group.

2. As concerns co-insurance or co-reinsurance groups which do not fall within the scope of the first paragraph (for the reason that they have been in existence for over three years or have not been created in order to cover a new risk), the exemption provided for in Article 1(e) shall apply on condition that the insurance products underwritten within the grouping arrangement by the participating undertakings or on their behalf do not, in any of the markets concerned, represent:

(a) in the case of co-insurance groups, more than 20 % of the relevant market;

(b) in the case of co-reinsurance groups, more than 25 % of the relevant market.

Article 8

Conditions for exemption

The exemption provided for in Article 1(e) shall apply on condition that:

(a) each participating undertaking has the right to withdraw from the group, subject to a period of notice of not more than one year, without incurring any sanctions;

(b) the rules of the group do not oblige any member of the group to insure or reinsure through the group any risk of the type covered by the group;

(c) the rules of the group do not restrict the activity of the group or its members to the insurance or reinsurance of risks located in any particular geographical part of the European Union;

(d) the agreement does not limit output or sales;

(e) the agreement does not allocate markets or customers;

(f) the members of a co-reinsurance group do not agree on any other premium than the risk premium.

CHAPTER V

SECURITY DEVICES

Article 9

Conditions for exemption

The exemption provided for in Article 1(f) shall apply on condition that:

(a) the technical specifications and compliance assessment procedures are precise, technically justified and in proportion to the performance to be attained by the security device concerned;

(b) the rules for the evaluation of installation undertakings and maintenance undertakings are objective, relate to their technical competence and are applied in a non-discriminatory manner;

(c) such specifications and rules are established and distributed with an accompanying statement that insurance undertakings are free in individual cases to accept other security devices or approve other installation and maintenance undertakings which do not comply with these technical specifications or rules;

(d) such specifications and rules are provided simply upon request to any interested person;

(e) such specifications include a classification based on the level of performance obtained;

(f) a request for an assessment may be submitted at any time by any applicant;

(g) the evaluation of conformity does not impose on the applicant any expenses that are disproportionate to the costs of the approval procedure;

(h) the devices and installation undertakings and maintenance undertakings that meet the assessment criteria are certified to this effect in a non-discriminatory manner within a period of six months of the date of application, except where technical considerations justify a reasonable additional period;

(i) the fact of compliance or approval is certified in writing;

(j) the grounds for a refusal to issue the certificate of compliance are given in writing by attaching a duplicate copy of the records of the tests and controls that have been carried out;

(k) the grounds for a refusal to take into account a request for assessment are provided in writing;

(l) the specifications and rules are applied by bodies observing the appropriate provisions of norms in the series EN 45000;

(m) any technical specifications, rules, procedures or codes of practice which are adopted by an association or associations of insurance or reinsurance undertakings in one or several Member States explicitly recognise as equally valid any such technical specifications, rules procedures or codes of practice adopted by national associations of insurance or reinsurance undertakings in other Member States;

(n) any technical specifications, rules, procedures or codes of practice which are adopted by an association or associations of insurance or reinsurance undertakings in one or several Member States explicitly and automatically recognise as equally valid any approval of a security device or installing and maintenance undertaking issued by an association of insurance or reinsurance undertakings in another Member State.

Article 10

Agreements not covered by the exemption

The exemption provided for in Article 1(f) shall not apply to technical specifications, rules, procedures or codes of practice adopted by an association or associations of insurance or reinsurance undertakings in one or several Member States if there exist equivalent technical specifications, rules, procedures or codes of practice at European level.

CHAPTER VI

MISCELLANEOUS PROVISIONS

Article 11

Application of the market share threshold

1. For the purposes of applying the market share threshold provided for in Article 7(2) the following rules shall apply:

(a) the market share shall be calculated on the basis of the gross premium income; if gross premium income data are not available, estimates based on other reliable market information, including insurance cover provided or insured risk value, may be used to establish the market share of the undertaking concerned;

(b) the market share shall be calculated on the basis of data relating to the preceding calendar year;

(c) the market share held by the undertakings referred to in Article 2(3)(e) of shall be apportioned equally to each undertaking having the rights or the powers listed in Article 2(3)(a).

2. If the market share referred to in Article 7(2)(a) is initially not more than 20 % but subsequently rises above this level without exceeding 25 %, the exemption provided for in Article 1 shall continue to apply for a period of two consecutive calendar years following the year in which the 20 % threshold was first exceeded.

3. If the market share referred to in Article 7(2)(a) is initially not more than 20 % but subsequently rises above 25 %, the exemption provided for in Article 1 shall continue to apply for one calendar year following the year in which the level of 25 % was first exceeded.

4. The benefit of paragraphs 2 and 3 may not be combined so as to exceed a period of two calendar years.

5. If the market share referred to in Article 7(2)(b) is initially not more than 25 % but subsequently rises above this level without exceeding 30 %, the exemption provided for in Article 1 shall continue to apply for a period of two consecutive calendar years following the year in which the 25 % threshold was first exceeded.

6. If the market share referred to in Article 7(2)(b) is initially not more than 25 % but subsequently rises above 30 %, the exemption provided for in Article 1 shall continue to apply for one calendar year following the year in which the level of 30 % was first exceeded.

7. The benefit of paragraphs 5 and 6 may not be combined so as to exceed a period of two calendar years.

Article 12

Withdrawal

The Commission may withdraw the benefit of this Regulation, pursuant to Article 7 of Regulation (EEC) No 1534/91, where either on its own initiative or at the request of a Member State or of a natural or legal person claiming a legitimate interest, it finds in a particular case that an agreement to which the exemption provided for in Article 1 applies nevertheless has effects which are incompatible with the conditions laid down in Article 81(3) of the Treaty, and in particular where:

(a) studies to which the exemption in Article 1(b) applies are based on unjustifiable hypotheses,

(b) standard policy conditions to which the exemption in Article 1(c) applies contain clauses which create, to the detriment of the policyholder, a significant imbalance between the rights and obligations arising from the contract;

(c) in relation to the common coverage of certain types of risks to which the exemption in Article 1(e) applies, one of the two following situations occurs:

- one or more participating undertakings exercises a determining influence on the commercial policy of more than one group on the same market,

- the setting-up or operation of a group results, through the conditions governing admission, the definition of the risks to be covered, the agreements on retrocession or by any other means, in the sharing of the markets for the insurance products concerned or for neighbouring products.

Article 13

Transitional period

The prohibition laid down in Article 81(1) of the Treaty shall not apply during the period from 1 April 2003 to 30 September 2003 in respect of agreements already in force on 31 March 2003 which do not satisfy the conditions for exemption provided for in this Regulation but which satisfy the conditions for exemption provided for in Regulation (EEC) No 3932/92.

Article 14

Period of validity

This Regulation shall enter into force on 1 April 2003. It shall expire on 31 March 2013.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, ...

For the Commission

...

Member of the Commission

(1) OJ L 143, 7.6.1991, p. 1.

(2) OJ C 163, 9.7.2002.

(3) OJ L 398, 31.12.1992, p. 7.

(4) COM(1999) 192 final.

(5) CES 1139/99.

(6) PE A5 - 0104/00.

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