The Legal 500

THE EU and UK competition authorities are carrying out several consultations on revised legislation and guidance, as well as a number of market studies.

Commission consulation on insurance block exemption

The European Commission is conducting a public consultation on a revised draft block exemption regulation (BER) for the insurance sector. The current insurance BER will expire on 31 March 2010.1 Following an initial 18-month consultation period, the Commission’s revised draft has narrowed the scope of the BER, deleting agreements on standard policy conditions and agreements on security devices. However, the Commission has concluded that two types of co-operation specific to the insurance industry should continue to be covered:

Agreements in relation to joint compilations, tables and studies

The draft BER limits this exchange of information to that which is necessary for the creation of these defined compilations, tables and studies. Further, interested third parties (such as consumer organisations) would be able to gain access to the shared data, with a public security exception.

Co(re)insurance pools (or common coverage of certain risks)

The Commission has suggested several changes to this exemption, including:

• amending the method of market share calculation to make it more consistent with other competition rules;
• a 3% increase in the flexibility percentage for market share thresholds; and
• a change to the definition of ‘new risks’.

Under article 2(7) of the draft BER, new risks are now defined as:

‘Risks that did not exist before and for which insurance cover requires the development of an entirely new insurance product, not involving an extension, improvement or replacement of an existing insurance product.’

The consultation period closed on 30 November 2009. The Commission is especially interested in feedback on the draft definition of new risks, the policy on pools and the public security exception for access to exchanged information. Information regarding the review of the BER is available at: http://ec.europa.eu/competition/sectors/financial_services/insurance.html.

OFT consultation on exception to duty to refer mergers

The Office of Fair Trading (OFT) is conducting a public consultation on its draft revised guidance on the exceptions to its duty to refer merger cases to the Competition Commission (CC) and its ability to accept undertakings in lieu of reference.

Key changes from the previous guidance are:

• An update of guidance on the de minimis exception, used where the OFT believes that the market concerned is not of sufficient importance to justify a reference to the CC. The OFT is considering in particular its approach:

• a) to the relationship between the de minimis exception and the availability of undertakings in lieu;

  b) the framework used to determine whether the expected impact of a merger outweighs the public cost of a referral to the CC;

  c) the role of deterrence as a factor in the OFT’s decision-making process; and

  d) how the OFT might be able to use its discretion to reduce merger review costs.

• Further explanation of when customer benefits in the form of efficiencies may outweigh any adverse competitive effects and operate as an exception to the duty to refer to the CC.
• A general update of the OFT’s practice in relation to cases where it accepts undertakings in lieu of a reference to the CC and, in particular, an explanation of the practice of requiring an upfront buyer in relation to divestment undertakings.

The consultation period is open until 15 January 2010 and the consultation documents are available at: http://www.oft.gov.uk/news/press/2009/120-09.

OFT market studies into advertising and pricing

The OFT is currently conducting two market studies into advertising and pricing, which are designed to aid it in future decisions on advertising and pricing practices, especially in cases involving the internet.

The first study looks into online targeting of advertising and pricing. It will cover behavioural advertising and customised pricing that is tailored using information gathered about consumers’ internet use. This study is expected to be completed by spring 2010.

The second study explores potentially misleading pricing practices, particularly, but not exclusively, as used on the internet. Practices to be examined include drip pricing, baiting sales, reference prices, time-limited offers and complex pricing. The study will also look into price comparison sites that use such methods. This study is expected to be completed by summer 2010.

The OFT will accept written comments on its statement of scope for the studies until 18 December 2009. Further information is availablehere.

By Leah Heifetz, intern, Berwin Leighton Paisner LLP.

E-mail: leah.heifetz@blplaw.com.