EU court of justice declares anti-competitive the agreements between insurance companies and repair shops

On the 14th of March, the EU Court of Justice issued a judgement against the agreements that the Hungarian insurers conclude every year with car dealers or with their national associations with regard to the services the insurers provide in case of road accidents.
In fact, according to the conditions and rates established for the insured vehicles, the dealers can immediately repair the car. They also act to the benefit of the insurers by proposing their insurance policies to the drivers, when selling or repairing a car. In exchange, the dealers get an increased remuneration from the insurers depending on the number of insurance policies they sell. These agreements have been considered as anti-competitive and prohibited by the Hungarian Competition Authority, which also imposed fines on the contracting parties. The case has been transferred to the EU Court of Justice by the Hungarian Supreme Court, asking for a ruling on the effects that those behaviours could have for the competitiveness of the market.

The Court of Justice acknowledged the existence of a link between the two above mentioned activities: car repairing and selling of insurance policies. Despite these agreements are concluded vertically, which means between industries non competing with each other and with normally separated businesses, their link can in this case be a threat for the competitiveness of the market.

The Court asserted that it will now be up to the Hungarian jurisdiction to verify the degree of threat that the concluded agreements can pose to the competition of the market. In doing so, the Hungarian jurisdiction will have to consider the link between the insurers and the dealers as well as the nature of the decisions that the car dealers’ national association made to establish ‘suggested rates’, which were at the basis of the agreements. If the jurisdiction will find that the purpose of such decisions was to limit or weaken the competition, these will become illegal. The same illegality will then be declared for the agreements between the Hungarian insurers and the car dealers.