EN Case No COMP/M.6743 - TALANX INTERNATIONAL/ MEIJI YASUDA LIFE INSURANCE COMPANY/ HDI POLAND Only the English text is available and authentic. REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 6(1)(b) NON-OPPOSITION Date: 19/11/2012 In electronic form on the EUR-Lex website under document number 32012M6743 Office for Publications of the European Union L-2985 Luxembourg EUROPEAN COMMISSION Brussels, 19.11.2012 In the published version of this decision, some C(2012)8606 information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004 concerning non-disclosure of business secrets and PUBLIC VERSION other confidential information. The omissions are shown thus […]. Where possible the information MERGER PROCEDURE omitted has been replaced by ranges of figures or a general description. To the notifying parties: Subject: Case No COMP/M.6743 - Talanx International/ Meiji Yasuda Life Insurance Company/ HDI Poland Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/20041 Dear Sir/Madam, 1. On 17 October 2012 the European Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 by which Talanx International AG ("TINT", Germany) and Meiji Yasuda Life Insurance Company ("MY", Japan) acquire within the meaning of Article 3(1)(b) of the Merger Regulation joint control of HDI Asekuracja S.A ("HDI Poland Non-life", Poland) and HDI-Gerling Życie S.A ("HDI Poland Life", Poland) by way of purchase of shares. I. THE PARTIES 2. TINT is a fully-owned direct subsidiary of Talanx AG, […]2. Talanx provides life and non-life insurance products and is also active in the market for reinsurance. Its activities have a worldwide scope, and it is also active in Poland. 3. MY is a Japanese insurance company, providing both life and non-life insurance products and to a much lesser extent reinsurance. Outside Japan, MY operates through subsidiaries and affiliates in Asia, Europe and North America. In Poland, MY only operates through its shareholdings in Towarzystwo Ubezpieczeń i Reasekuracji Warta S.A. ("WARTA Non-Life"), Towarzystwo Ubezpieczeń na Życie Warta S.A ("WARTA Life") 1 OJ L24, 29.1.2004, p. 1 ("the Merger Regulation"). With effect from 1 December 2009, the Treaty on the Functioning of the European Union ("TFEU") has introduced certain changes, such as the replacement of "Community" by "Union" and "common market" by "internal market". The terminology of the TFEU will be used throughout this decision. 2 HDI V.a.G holds 82.34% of the shares in Talanx, while MY holds 6.49% of the shares. The remaining shares are in free float. Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111 (collectively referred to as "WARTA") and Towarzystwo Ubezpieczeń Europa S.A. ("TU Europa"), all of which are jointly controlled with TINT. 4. HDI Poland Non-life is a Polish company providing non-life insurance to individual and business customers in Poland and having only marginal reinsurance activities. 5. HDI Poland Life is a Polish company providing life insurance to individual and business customers in Poland. It is not active in the reinsurance market. 6. Both HDI Poland Non-life and HDI Poland Life (collectively referred to as "HDI Poland") are currently fully-owned subsidiaries of TINT. II. THE OPERATION AND THE CONCENTRATION 7. The notified transaction consists in the acquisition of joint control by TINT and MY over HDI Poland. It follows the earlier acquisition of joint control by the same parties over WARTA, which was cleared by Commission decision on 4 April 2012 (the "WARTA Decision")3. 8. The proposed transaction will take place in three consecutive stages. First HDI Poland Non-life will be merged into WARTA Non-life as surviving entity. TINT, as the sole shareholder of HDI Poland Non-life, will receive from WARTA Non-life newly issued ordinary shares in return. Upon completion, TINT will hold 75.003% of the shares in WARTA Non-life, while MY will hold 24.997%. 9. In a second stage, TINT, as the sole shareholder of HDI Poland Life, will contribute all of the shares in HDI Poland Life to WARTA Non-life. TINT will receive from WARTA Non-life newly issued ordinary shares in return. Upon completion, TINT will hold 75.74% of the shares in WARTA Non-life, while MY will hold 24.26%. 10. Finally, WARTA Life, a fully-owned subsidiary of WARTA Non-life, will be merged into HDI Poland Life as surviving entity. 11. As a result of the transaction, TINT and MY will hold, respectively, 75.74% and 24.26% of the shares in WARTA Non-Life, which in turn will hold 100% of the shares of HDI Poland Life. Furthermore, WARTA Non-Life will own all assets and liabilities of HDI Poland Non-Life. [Description of the corporate governance regarding Warta agreed between TINT and MY]. 12. [Description of the deadlock resolution mechanism regarding Warta agreed TINT and MY]. 13. Therefore, TINT and MY will acquire joint control over HDI Poland for the purposes of the EU Merger Regulation and the notified transaction represents a concentration within the meaning of Article 3(1)(b) of the Regulation. III. EU DIMENSION 14. The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million4 (TINT: EUR 24 756 million; MY: EUR 48 468 million). Moreover, the aggregate Community-wide turnover of each of at least two of the undertakings concerned is more than EUR 250 million (TINT: EUR […] million; MY: 3 Case COMP/M.6521 Talanx International/Meiji Yasuda Life Insurance/Warta, decision of 04.04.2012. 4 Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission Consolidated Jurisdictional Notice (OJ C95, 16.04.2008, p1). 2 EUR […] million). Finally, although MY achieves more than two thirds of its Community-wide turnover within Germany, TINT does not. Therefore the notified transaction has an EU dimension. IV. COMPETITIVE ASSESSMENT IV.1. Relevant Markets IV.1.1. Product Market definition 15. With regard to the relevant product market, in previous decisions the Commission has distinguished between three broad categories of insurance products: life insurance, non- life insurance and reinsurance5. Within these categories, insurance products are designed to cover specific risks. 16. From a demand side perspective, the Commission in previous decisions has noted that life and non-life insurance products might be sub-divided into as many product markets as there are different kinds of risks covered since the characteristics of individual policies are distinct and the insurance against a given risk is not generally substitutable with insurance against another risk from the consumer’s perspective6. 17. From a supply side perspective, however, the Commission has noted that certain types of risks are covered under similar conditions by a large number of companies which are simultaneously active in providing insurance against several risks, as a result of which it has considered that in certain cases a broader product market definition might be appropriate7. 18. The Notifying Parties share the supply side considerations and agree that a broader definition of the markets would be more appropriate than one based on demand side considerations only. Nevertheless, they have provided market data also on the basis of the segmentation established by the Polish Insurance Act, and where suggested by Commission precedent also on a narrower basis. IV.1.1.1. Life insurance 19. With respect to life insurance, the Commission has in certain previous decisions looked separately at (i) pure protection products, (ii) pension products and (iii) investment products8, but also, on other occasions, considered pension and investment products together, 5 See, e.g., Cases COMP/M.4284 AXA/Winterthur, decision of 28.08.2006; COMP/M.6053 CVC/Apollo/Brit Insurance, decision of 09.01.2011; COMP/M.6217 Bâloise Holding/Nateus/Nateus Life, decision of 03.08.2011. 6 See, e.g., Cases COMP/M.5075 Vienna Insurance Group/EBV, decision of 17.06.2008; COMP/M.5925 Metlife/Alico/Delam, decision of 24.08.2010; COMP/M.5083 Groupama/OTP Garancia, decision of 15.04.2008; COMP/M.6217 Bâloise Holding/Nateus/Nateus Life, decision of 03.08.2011. 7 See, e.g., Cases COMP/M.5075 Vienna Insurance Group/EBV, decision of 17.06.2008; COMP/M.5728 Crédit Agricole/Société Générale Asset Management, decision of 22.12.2009; COMP/M.5925 Metlife/Alico/Delam, decision of 24.08.2010; COMP/M.6217 Bâloise Holding/Nateus/Nateus Life, decision of 03.08.2011. 8 See Case COMP/M.4701 Generali/PPF Insurance businesss, decision of 03.12.2007. 3 but in a separate class from pure protection products9. The Commission has, however, so far left the exact product market definition open10. 20. The Notifying Parties point out that the classification according to the Polish Insurance Act does not strictly distinguish between protection, pension and insurance products. Rather, within some classes of insurance different types of products are grouped11. Therefore the Notifying Parties propose a market segmentation by insurance class. IV.1.1.2.Non-life insurance 21. Within the non-life insurance market, the Commission has generally considered a distinction between the following segments: (i) accident and sickness; (ii) motor vehicle; (iii) property; (iv) marine, aviation and transport ("MAT"); (v) liability; (vi) credit and suretyship and (vii) travel insurance12. The precise segmentation of the non-life insurance markets retained in different cases has differed slightly from case to case, given the particularities of individual situations. IV.1.1.2.1. Accident and sickness insurance 22. Whilst the Commission has in the past considered accident and sickness products as part of a single market13, the Notifying Parties note that, according to the Polish Insurance Act two separated classes of insurance are identified, i.e.