“We don’t detect fraud and we don’t have the legal leverage to sanction the company so that it sells at low prices and grows organically,” Bohdan Chiritsoyu, president of the Competition Council, argued in parliament on Monday during the Euroins bankruptcy scandal. . . He said a low price is essentially a good thing as long as it is stable and that is reflected in solvency, which is the job of the Financial Supervisory Authority (ASF).

The chairman of the Competition Council was heard in the Senate on Monday on the subject of the bankruptcy launched at Euroins, the leader of RCA with almost 2.8 million RCA customers.

• “We cannot play each other’s role. We are created so that there is competition and prices do not rise too much, and ASF was created so that insurance companies do not take risks that they cannot take, like BNR.
• We cannot replace each other’s activities. We have neither legal leverage nor expertise. Speaking of restrictions, if you ask us what the RCA price should be, from March 2022 or April, I don’t know because we don’t have the experience to say what the RCA price should be.” – said Bohdan Chiritsa.

He claimed that authorities had fined insurance companies millions of euros, the latest in December 2022, for deals and price gouging.

Daniel Zamfir: ASF asked you to start an investigation into the premises of a dominant position in City Insurance from October 2020

PSD Senator Daniel Zamfir accused the President of the Competition Council of the fact that the authorities did not intervene, although back in October 2020 they had a request from the ASF to open an investigation into the premises of a dominant position in City Euroins and strong concentration in the RCA market

Daniel Zamfir says he asked ASF president Nick Mark for his correspondence with the Competition Council, which shows the ASF requested the intervention of the Chirica-led authorities back in October 2020.

• “ASF sent a request on 20/10/2020 asking to open an investigation, as there are prerequisites for the dominant position of the competitor at the time – City Insurance, which in 2016 achieved a market share of 16% to 42% of the market in RCA alone.
• We also note that at the time Euroins also had a market share of 32.7%, so the 2 companies had a market share of over 74%, so the concentration is extremely important, especially as the prices they were charging the 2 companies were dumping.
• In any analysis, as well as with ASF, all prices at the 2 companies were significantly less than half of the competitor above them. That is, if the average market rate was 500-600 lei, two companies set prices of about 200 lei. So, from the experience of Astra and Carpatica, it was obvious that their price was lower than the market price.
• I think you should have intervened when you discovered the dumping prices, a fact that the ASF has been reporting for a long time, and it was clear that we were moving towards the end result of the Ponzi scheme, Caritas, that is, the fact that both companies did not compensate . “, said Zamfir.

Zamfir: You scolded ASF for undermining City Insurance and threatened to fine

The PSD senator warned that instead of taking action, the Competition Council berated the ASF for embarrassing City Insurance and threatened fines.

• “I am returning to communication with the ASF. You answered on 25.11. 2020 in which you ask them to give you more additional information, after which ASF comes back on 12/01/2021 via 2 addresses where they report that they have increased their market share by another 11.4%.
• What I thought was very cool about this correspondence is what you wrote on 09/09/2021: In short, you ask ASF, you scold them, that they set different conditions in the insurance market, that ASF will not be useful to one of the companies, and it is about City Insurance and you will tell Mr. Mark that if he does not give you the ASF position on the remaining and undetermined aspects by 30.09.2021, you will impose a heavy fine on him and give him 5000 lei for each day of delay if he does not tell you , which ASF does in relation to 2 insurance companies.
• I mean, these people told you that there is concentration in the market, it’s obvious from the data (74%), it was also obvious that there was price dumping – I think even an 8-10th grader thinks it’s something dirty, when the prices are so low that the losses cannot be covered in any way, and you write to him that it is not very fair when he controls the city insurance, and you fine him if he does not say what and how “, said Daniel Zamfir.

In response, Bohdan Hrytsoyu stated that according to the law, the authority requires additional information from the authorities within certain deadlines.

• “Regarding the message, if we receive a message, we are obliged to analyze it, request information from the authorities, such is the law, we draw their attention to the fact that they must respond to us within a certain period. At the same time, we did not initiate any measures against ASF.” Chiritsa defended himself.

Kiritsoyu: We intervene if someone increases their market share and rips off customers, not if they have low prices

The President of the Competition Council also argued that competition law does not allow the authorities to intervene if two firms achieve high market power but have low prices for customers.

• “Can the Competition Council do anything if 2 companies occupy 80% of the market and have low prices? The answer is no. The situations you described are not covered by competition law and very well. They can create problems in the insurance market and these were discussions with the ASF and I discussed these things in your office a year ago.
• We can step in if someone with a large market share comes in with a high price. If he is using his strong market position to rip off customers, yes, we can intervene. But when someone has a low price, it is not a matter in which the Competition Council should interfere.” – said Bohdan Chiritsoyu.

According to him, the proper intervention mechanism belonged to the Financial Supervisory Authority (ASF), which checks the solvency of insurance companies.

• “The ASF has the leverage, not us. We issue fines for deals and price increases. Market share is not illegal. Orange has more than 40%. No one ever came up with the idea…
• We do not allow them to buy other companies. But if a company has many customers and reaches more customers, it can achieve whatever market share it wants, that’s what the law says. Competition law is general, it doesn’t cover insurance, it doesn’t give me market share restrictions.
• So for a company that keeps prices low and goes bankrupt because of it…if it went bankrupt, say Allianz, yes, that would be a topic for discussion), but this company had low prices, it went bankrupt, so it did its bad if it’s a scam, again we don’t determine if the company has enough money and capital. We have no legal leverage.
• We do not detect fraud. We don’t stop people who sell to customers at a low price. Abuse of dominance means I can’t avoid buying from someone, and that gives me a very high price. I cannot stop the company from growing organically. If it’s cheap and more and more people come, that’s it. We have no leverage over a large firm that sells to customers at low prices.” also said the head of the Competition Council.

Zamfir: If the Competition Council says it has nothing to do with the one billion euro hole, resign sir!

The President of the Antimonopoly Office also said that he discussed with the ASF the possibility of limiting the market share if the analyzes prove that consumers are affected, an aspect that will now be discussed in the government.

But even in this case, the restriction must be implemented by amending the special insurance legislation.

In response, the PSD deputy told the head of that body that “if the Competition Council says it has nothing to do with the billion-euro hole,” he should resign.

Chiritsou is convinced that the government is justified in limiting RCA prices

The President of the Competition Council, Bohdan Chiritsoyu, said on Monday after a hearing in the Senate Economic Committee that there are millions of Euroins customers who in the next period will have to change their policy and go to another company and, obviously, this change can cause disruptions in the market, so in such a the situation seems to justify the establishment of the upper limit of prices for a limited period.

• “This is a strong shock on the market. There are millions of Euroins customers who should change their policy in the near future, should go to another company. It is clear that this change can create turmoil in the market. And then, in such a situation, it seems to me justified that there should be a price ceiling for a limited period.
• At what level, what mechanism, that we go to the price from March 2022 … these are things that we are not in a position to comment on.
• We settled on the possibilities of the ceiling, limited. The exact price and the method of its limitation will be established by ASF. I am convinced that the Government will approve.” said Bohdan Chiritsa, quoted by News.ro.

He showed that the ceiling is introduced precisely so that we do not have an increase, so that we do not have a panic.

“After six months, the world calms down. We will win a break. Second, we have a chance to make a number of changes to the law to ensure that the RCA insurance mechanism works well so that it is not inflationary,” Chiritsou said.

Bohdan Chiritsoyu said of the RCA policy price cap project postponed at the last Government meeting: “We are pleased that the Government and the ASF have recognized that the cap should not be based on bottom line alone. . I also have to look at the ingredients that make up that amount.”