CCPC issues preliminary findings in insurance industry investigation

By Diarmaid Gavin and Ciaran Teape

Introduction

The Competition and Consumer Protection Commission (“CCPC”) recently issued preliminary findings to seven parties alleged to have been engaged in anti-competitive cooperation in the insurance industry over a 21-month period between 2015 and 2016.[1] The seven parties include five insurers, an insurance broker and an insurance industry trade association.

In 2016, the CCPC began its investigation into the alleged anti-competitive activity. The alleged activity was seen as contrary to section 4(1) of the Competition Act 2002 and Article 101 of the Treaty on the Functioning of the European Union. The investigation parallels a European Commission investigation into the Irish insurance sector which saw numerous premises subject to unannounced dawn-raids in 2017.[2] The preliminary findings allege that the parties involved engaged in a practice known as “price signaling” both publically and between the parties. While the CCPC has made it clear in their publication on the matter that the findings are “provisional and no conclusion should be drawn at this stage” there are a number of interesting aspects to this investigation which are worth noting.

“Price Signaling”

The alleged conduct at issue in this investigation – price-signaling – is itself of interest because unlike more traditional price fixing cartel, the collusion is less overt and can be harder to distinguish from legitimate communications that companies may make to the public on pricing and terms. While most businesses will be acutely aware of the fact that they cannot meet with competitors to discuss their pricing plans, less consideration may be given to the consequences of public statements referring to changes in commercial behavior. The investigation therefore serves a useful reminder of the broad extent to which competition law restricts discussion and sharing of commercially sensitive information between businesses.

The use of Civil enforcement powers

The fact that the CCPC has indicated that it will use its civil enforcement powers under the 2002 Act is also of interest. To date, the CCPC has used its criminal law enforcement powers to tackle bid rigging and price fixing cartels and has secured a number of convictions of this activity.[3] However, criminal law proceedings attract a higher burden of proof and the nature of the behavior complained in this investigation may be difficult to establish “beyond all reasonable doubt”.

The CCPC is also using its enforcement powers introduced under section 14B of the 2002 Act which allow the parties under investigation to enter into binding legal commitments with the CCPC regarding their future behavior without the need for a lengthy court process or admission of wrongdoing. These agreements are affirmed by a High Court Order and breach is subject to contempt of court proceedings.

It is interesting to note unlike other regulators such as the Central Bank of Ireland, the Data Protection Commission, Revenue and the Commission for the Regulation of Utilities, the CCPC’s civil enforcement powers do not include the power to impose administrative fines and the CCPC is limited to seeking injunctive or declaratory relief from the courts. However, this is due to change in relation to the enforcement of breaches of EU competition law when Ireland implements the ECN+ Directive by the deadline of 4 February 2021.[4]

Use of digital forensic tools

The manner in which the investigation has been conducted is what may best be considered a reflection of the nature of business in the modern era. As detailed by the CCPC, the investigation gathered “a substantial amount of electronic material from relevant parties” and this was done with “the assistance of digital forensic tools”. As business and business activity becomes more reliant on digitisation and dependency on technology for business increases, the methods and means by which state authorities investigate alleged competition law and other regulatory law breaches more broadly will continue to rely further on digital investigative tools. Most records are now stored electronically and, if in future when the CCPC seeks to investigate suspected breaches of competition law, companies will need to be prepared to co-operate with this transition to the further use of electronic investigative tools. The investigation therefore may serve as a signposting for businesses, reminding them that in the modern era, the CCPC will be more likely to require the surrender of digital records. Naturally this poses a pivotal question for businesses about whether they have the appropriate infrastructure in place to surrender records without significantly disrupting business operations. Businesses will need to ensure that they have appropriate back-up of digital materials and business continuity arrangements in the event of having digital assets or files seized by an investigator.

[1] https://www.ccpc.ie/business/ccpc-issues-preliminary-findings-to-organisations-under-investigation-in-the-private-motor-insurance-sector/