Powszechny Zakład Ubezpieczeń and Maximus Broker will be obliged to pay over PLN 56 mln for concluding competition-restricting agreement. Their unlawful cooperation concerned group insurance for children and youth as well as workers of education centres in Kujawsko-Pomorskie voivodeship

Under antimonopoly law, agreements which have as their object or effect elimination or restriction of competition are pronounced prohibited. Market division is considered one of the most harmful practices. It occurs whenever undertakings divide a given territory, products and target groups and thus intentionally avoid competition. Many entities lose a lot from this malpractice, however, consumers are particularly affected as they miss out on the opportunity to select the supplier of goods and services. A maximum financial sanction for participation in a collusion is 10 percent of revenue gained in the year preceding the issuance of the decision.

Notification on conclusion of agreement consisting in market division between PZU and Maximus Broker (a company from Toruń) was submitted to UOKiK by a journalist in 2009. The information collected by the Office demonstrates inter alia that the inspection with search perfomed at the companies’ premises proved the collusion was entered in 2009 and it regarded the sale of group personal accident insurances (pl.NNW) to education centres in Kujawsko-Pomorskie voivodeship. These are insurances concluded on behalf of students and school personnel, and however not compulsory, they gained popularity thanks to their low premium. Insurance agreements are usually entered into by the founding body of the centre, e.g. village-mayor, city-mayor or the staroste. The insured party may directly use the offer of the insurer or the intermediary – agent or broker. In Kujawsko-Pomorskie voivodeship over half of communes (gminas) i.e. 85 out of 144 entitled Maximus Broker company to conclude such insurance agreements on their behalf.

Before the collusion the companies were competitors as the insurer intended to contact local governments directly, with no assistance of agents. In July 2009 the companies ceased competition and divided the market.

PZU undertook the commitment to sell group personal accident insurances to education centres exclusively with the assistance of Maximus Broker. In return, the agent recommended the offer of Powszechny Zakład Ubezpieczeń (PZU) to its customers and promoted the package as the most favourable irrespective of its real quality and conditions provided by other insurers. Under the law, the only link between a broker and an insurer can be the agreement on commission rates. Moreover, in compliance with the law, good practice and sector regulations, a broker should act for the benefit of the insuring party (schools and local governments in this case). He should provide the party with the negotiated terms of insurance policy and recommend the most favourable package. As a result of applying the unlawful practice, Powszechny Zakład Ubezpieczeń did not have to compete with its rivals and prepare more favourable offers. Instead, PZU could easily sell its services in schools situated in more than half of communes (gminas) of Kujawsko-Pomorskie voivodeship. Consequently, Maximus Broker wouldn’t run the risk of losing clients if a commune concluded the agreement directly with PZU.

- The results of prohibited practice affected other insurers, entities concluding agreements with Maximus Broker and directly the insured parties. Competitors of collusion participants were taken away a significant distribution channel for selling their services in Kujawsko-Pomorskie voivodeship, schools and local governments lost an opportunity to choose the best offer, students and education staff were not provided with more favourable insurance conditions – states the President of UOKiK, Mrs. Małgorzata Krasnodębska-Tomkiel

It is worth noting that the market position of Maximums Broker has remarkably improved since it concluded agreement with PZU. It has evolved into one of the most powerful insurance brokers in Poland in respect of sale of group personal accident insurances (pl. NNW) for children, youth and personnel of education centres. Thus the undertaking tripled its share on this market.

For the participation in unlawful agreement PZU and Maximus Broker were imposed financial penalties respectively - PLN 56 604 783 and PLN 61 858. The discrepancy of the amounts stems from different incomes gained by the punished entities, not the gravity of offence. Additionally, the President of UOKiK ordered to discontinue the prohibited practice. The decision is not final, it can be appealed to the court.

Counteracting inadmissible agreements of undertakings is one of priorities of the Office of Competition and Consumer Protection. For this reason in 2012 UOKiK will carry out educational campaign targeted at public opinion. Its aim is to show negative effects of collusions for the economy, e.g. higher prices paid by consumers as well as warning against stringent punishment for the application of unlawful practice. In 2012 the Office will be providing information on the action by mass media. Furthermore, UOKiK intends to hold debates and conferences with the participation of all the interested parties. Also, undertakings will receive letters informing on the harmul effects of prohibited agreements.

Simultaneously, the Office reminds you that participants of prohibited agreements may evade financial sanctions thanks to the leniency programme. Undertaking may submit a formal application in person at the seat of the Office of Competition and Consumer Protection in Warszawa, to the employee of UOKiK for official record, by mail, fax or email: leniency@uokik.gov.pl. Answers to all questions regarding the programme, even anonymous, are provided by UOKiK lawyers under the telephone number: +48 22 55 60 555.

Additional information for the media:
Małgorzata Cieloch, Spokesperson for UOKiK
Department of International Relations and Communication
Pl. Powstańców Warszawy 1, 00-950 Warszawa
Phone: +48 22 55 60 106
Fax: +48 22 826 11 86
E-mail: malgorzata.cieloch@uokik.gov.pl