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First cartel sanctioned by AdC in Portuguese financial with highest fines ever

Christian Fernsby |
The AdC applied a fine totalling more than €54 million on insurance companies, board members and directors involved in the “insurer cartel”.

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The proceedings is now concluded with the sanctioning of Lusitania - Companhia de Seguros SA and Zurich Insurance PLC.

The undertakings involved in the cartel coordinated the prices for large corporate clients regarding workplace accident, health and auto insurance.

Undertakings presented higher prices so that the incumbent insurer retained the respective client.

The AdC has now sanctioned Lusitania and Zurich, two board members and two directors, to a fine of over €42 million, in addition to the €12 million already paid by Fidelidade and Multicare.

The investigation was formally initiated in May 2017, following the leniency request presented to the AdC by Seguradoras Unidas, and subsequently by Fidelidade – Companhia de Seguros S.A. and Multicare – Seguros de Saúde S.A.

In June and July 2017, the AdC conducted dawn raids at the premises of the involved insurers, in the Lisbon metropolitan area.

In August 2018, the AdC accused five insurers of cartel practices: Seguradoras Unidas, Fidelidade, Multicare, Lusitania and Zurich.

Seguradoras Unidas was the only insurance company to gain full exemption of a fine in the cartel proceedings because it was the first company to come forward under the Leniency Program and presented the AdC proof of participation in the cartel.

Fidelidade and Multicare benefited from a reduction of the fine in terms of the Leniency Program, as well as for participating in a settlement procedure with the AdC, in which the companies admit fault and agree to waive their right to continue with judicial proceedings.

Nonetheless, these firms were fined a total of €12 million.

The AdC’s investigation concluded that Lusitania shared the market through costumer allocation in the categories of workplace accident and auto insurance and Zurich did the same in the category of workplace accidents insurance, between 2014 and 2017.

Lusitania and Zurich, now sanctioned, exercised their rights of defence by submitting written pronunciations on February 26, 2019.

The amount of the fine is defined taking into account the magnitude of the infringement and according to the company's turnover and the annual payment of the office-bearers involved, and may reach a maximum of 10%, according to the Competition Law.

Fighting cartels continues to be a top priority of the AdC’s activity, because this practice is the most harmful of consumers’ welfare.

This decision of the AdC concludes the investigation initiated on 8 June 2017.

The Competition Law expressly prohibits cartels, which are agreements between firms that restrict competition, by their nature in a significant manner, in all or part of the national market, thereby reducing the welfare of citizens.

Non-compliance with the rules of competition not only reduces consumer welfare but also harms the competitiveness of firms, thus penalising the economy as a whole.

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