FAS summed up the results of antimonopoly control over the insurance market

The survey showed that OSAGO [third party liability insurance] market is controversial

Based on the analysis of enforcement practice by the antimonopoly body on the markets of insurance services, carried out by the Central FAS Office, the most problematic market within the past three years has been the market of mandatory civil liability insurance of vehicle owners (OSAGO).

In 2013-2016 the antimonopoly bodies received 15,658 complaints regarding operations of insurance companies on this market against 2457 complaints about actions of insurers on other insurance markets. Practically half of those complaints was readdressed by FAS по подведомственности to other authorities and regulators within jurisdiction, mostly to the Bank of Russia.

Majority of complaints from individuals concerned imposing OSAGO contracts for additional service upon types of voluntary insurance as well as other services including technical vehicle inspections.

Complaints also related to considerable reduction of the scope of OSAGO services by insurers (the so-called “queue” issues) and breaching the established pricing procedure for OSAGO services (including, failure by the insurers to apply proper value of the “bonus-malus” coefficient).

Solving the issues within their powers, the antimonopoly bodies considered the complaints filed in accord with the established procedures, issued 352 warnings in 2013-2016 to stop actions with signs of violating the antimonopoly law, of which 243 warnings (69%) were executed by the insurers within the designated period.  It is essential that Courts allowed none of the appeals filed on those warnings.

Due to failure to execute the remaining warnings and considering other statements by the antimonopoly bodies in 2013 - 2016 in 61 subjects of the Russian Federation, overall 324 cases were opened and (or) investigated upon signs of violating the antimonopoly law on the OSAGO market and 241 decisions were made confirming violations.

Following refusals by the violator (violators) to voluntarily eliminate the committed offences, the antimonopoly bodies issued 177 injunctions to stop violating the antimonopoly law and exercising actions designed to support competition, 80% of which were fully executed by the end of 2016.

So far, judicial bodies reversed only slightly over 3%   of decisions and determinations issued by the antimonopoly bodies. Warnings, opening and investigating cases, as well as making decisions were based on exposing relevant signs of facts of violations, particularly:

- Part 1 Article 10 of the Federal Law “On Protection of Competition” prohibited abusing market dominance. Signs and (or) facts of such violations predominantly were exposed in the actions of insurers with dominant position and were related to insurers imposing additional insurance and other services as well as breaching the established  pricing procedure for OSAGO services:

- Articles 11 and 11.1 of the Federal Law “On Protection of Competition” prohibit completion-restricting agreements and concerted actions by economic entities. In particular, such agreements include those on imposing various services between insurers as well as between insurers and operators of technical vehicle inspections, and agreements between insurers on reducing the scope of OSAGO services

- Articles 14 (the version before 2016), 14.2, 14.4, 14.8 (the current version) of the Federal Law “On Protection of Competition” prohibit various types of unfair competition. Most of the exposed signs and (or) facts of violations related to unfair competition by insurers involved in tenders for the right to concluded OSAGO contracts, organized by the authorities, local self-government bodies and other persons, when filing bid insurers indicated underrated insurance premium breaching the pricing procedure fir OSAGO services, as a result becoming the tender winners.

The most violations of the antimonopoly law by insurers on the OSAGO market (mostly Article 10 and 11 of the Federal Law “On Protection of Competition”) were committed in Privolzhie and South Federal Districts, 49 and 61 cases accordingly.

Having considered the cases, the antimonopoly bodies also issued 41 injunctions to transfer income to the federal budget obtained as a result of violating the antimonopoly law for the total amount 103.2 million RUB; issued 375 decisions to impose administrative fines, in total 225.5 million RUB, of which 354 were executed by the end of 2016.

Performing its control functions on the other insurance service markets (except OSAGO market), the antimonopoly bodies in 2013 - 2016: 1) issued 10 warnings to terminate actions that have signs of violating the antimonopoly law, 6 of which were executed within the designated period; 2) opened 74 antimonopoly cases, based on which 40 decisions were made confirming violations. Due to refusals of the violator (violators) to voluntarily eliminate the violations, 25 warnings were issued to stop violating the antimonopoly law and committing actions designed to support competition, 80% of which were executed in full.

Signs and (or) facts of violations, exposed by the antimonopoly bodies, in this part predominantly concerned agreements between credit and insurance organizations, where additional insurance services were imposed upon borrowers or disadvantageous insurance.

Upon considering cases other that OSAGO insurance markets, 76fines were imposed in total for 25.7 million RUB; an injunction was issued to transfer the income gained as a result вbreading the atnimonpoly law to the federal budget: 470,330 RUB.

In the analyzed period, exposing, preventing and suppressing competition-restricting (able to restrict competition) on the insurance market actions by the authorities and local self-government bodies, as well as organizations exercising their functions,   1 warning was issued (and executed), 11 antimonopoly cases were opened, following which 1 violation was eliminated voluntarily, and others by injunctions.

Reference:

To control enforcement of the antimonopoly law under the power determined, in particular, by the Federal Law “On Protection of Competition”, the atnimonpoly bodies consider statement son violating the antimonopoly law (Article 44); verify observance antimonopoly law (Article 25.1); issue mandatory warnings to terminated actions that have signs of violating the antimonopoly law (Article 39.1); open and investigate cases on violating the antimonopoly law (Articles 44 and 45); based on investigations of those cases issue mandatory warnings to stop violating the antimonopoly law (Article 50).

Warnings under Part 2 Article 39.1 ФЗof the Federal Law “On Protection of Competition” can be issued only when signs of individual violations of the Law are revealed, particularly,  Clauses 3, 5, 6 and 8 Part 1 Article 10 of the Federal Law “On Protection of Competition” prohibit various forms of abusing market dominance. In the version of the Federal Law “On Protection of Competition” that was in effect before 05.01.2016, warnings could be issued only upon ascertaining signs of violating Clauses 3 and 5 Part 1 Article 10 of the Federal Law “On Protection of Competition. Article 39.1 does not provide for issuing warning upon establishing signs of violating Articles 11 and 11.1 of the Federal Law “On Protection of Competition” that prohibits competition-restricting agreements and concerted actions.

Under Part 7 Article39.1 of the Federal Law “On Protection of Competition, if a warning is executed, an antimonopoly case is not opened and the person that executed the warning should not be held administratively liable for violating the antimonopoly law due to eliminating the violation.