ITALIAN CONSORTIUM FOR SPECIAL AGRICULTURAL RISKS (CIRAS) (Conclusion of the investigation)
PRESS RELEASE
The Italian Competition Authority has decided to reject the request for an exemption from the prohibition on restrictive agreements, which was filed by the Italian Insurance Consortium for Special Agricultural Risks (CIRAS), in compliance with section 4 of Law no. 287/90.
Following the full phase investigation, which was concluded in October 1994, the Authority found that the carrying out, in a coordinated fashion, of commercial activities in the market for insurance coverage of hail damages by CIRAS, a consortium composed by companies representing almost 95% of the market, constituted a substantial restriction of competition.
On the same date, however, the Authority issued a one year exemption, in compliance with section 4 of Law no. 287/90, for the activities of CIRAS, since it found that the restriction of competition justifiable by the exceptional and transitional nature of the legislative situation existing at that moment. As the end of the exemption period, CIRAS submitted a request to obtain a renewal of the exemption.
On the basis of the facts, the awaited legislative reform had not yet come about. At the conclusion of the new proceeding, which was started following CIRAS's latest exemption request, the Authority did not find that the continuation of CIRAS's activity would lead to improved supply conditions and bring substantial benefits to consumers.
It should also be noted that the legislative uncertainty which characterizes the hail insurance sector, which should have been resolved by subsection 1 of Section 127 of Legislative Decree no. 175/95, which enacts European Directive no. 92/49/CEE on hail insurance, does not constitute a sufficient condition to renew the exemption.
Indeed, even in the absence of a new regulation, it is to be noted that from January 1st, 1996, the legislation on the market for hail insurance has undergone a substantial change and, as such, the previous regulation provided for by section 9 of Law no. 185/92 can no longer be enforced. In particular, with the abolition of the above mentioned section 9, insurance companies are no longer required to constitute compulsory consortia; as such, the new structure of the market will have to be constructed on the basis of competition principles.
In conclusion, it should also be noted that the activities of hail insurance consortia, such as CIRAS, representing more than 95% of the market, could never be exempted.