In September 2011, Luxembourg's leading consumer organisation, the Union Luxembourgeoise des Consommateurs (ULC), lodged a complaint with the Luxembourg Competition Council (Conseil de la concurrence) against several insurance companies for  alleged cartel practices in the car insurance sector.

The companies concerned had signed an "explanatory note" to the 2003 grand ducal decree adopted further to the Motor Vehicle Insurance Act 2003. In this note, they agreed on a uniform application of the so-called bonus-malus scheme, i.e., a system whereby new policy holders are, as a general rule, assigned 11 points with no reduction in their insurance premium. Each year the policyholder is claim-free, one point is deducted, until the policyholder reaches level -3, at which point he or she becomes eligible for a 45% reduction in the basic premium.

This interpretation proved unfavourable to a significant percentage of car insurance policyholders and resulted, amongst other things, in persons who wished to insure a second vehicle being assigned automatically 11 points on the bonus-malus scale, meaning they were unable to benefit from a reduced premium, even if they had previously qualified for one for their first vehicle.

In its decision of 20 December 2012, the Competition Council found that this practice was contrary to the prohibition on anticompetitive agreements provided for by Luxembourg's antitrust legislation. The Council imposed a symbolic fine of EUR 200 on the Luxembourg insurance sector's professional association, the Association des Compagnies d'Assurances  (ACA), as well as the following fines on individual insurance companies: 

Le Foyer         EUR 235,863                         Allianz             EUR 25,138

LaLux              EUR 200,019                         AME Lux         EUR 14,855

AXA                EUR 108,046                         Arisa               EUR     212

La Bâloise       EUR 48,284                           Chartis            EUR     200

P&V                EUR 43,990                                      

When setting the fines, the Competition Council took into account several aggravating circumstances, such as (i) the elimination of an element of price competition in the car insurance sector, (ii) the impact of the cartel on a compulsory insurance scheme and end customers, and (iii) the close to 100% combined market share of the cartel participants, which are all major firms with the ability to conduct a legal assessment of the practices in question.

These factors were weighed against several mitigating circumstances, such as the (i) overt and transparent nature of the cartel, (ii) the absence of intentional wrongdoing and, most importantly, (iii) the role of the sector regulator, which encouraged and even approved certain aspects of the cartel practices by the insurance companies.


This case shows, once again, that the integration of the authority in charge of investigating competition offences, the Competition Inspectorate (Inspection de la concurrence), into the Competition Council, brought about by the Competition Act 2011, has expedited the handling of cases.

The Competition Council referred expressly to the European Commission's 2006 Fining Guidelines when determining the fines to be imposed on the car insurance companies. This reference shed much-appreciated light on the Competition Council's fining policy, which had previously been rather opaque.

The reference to the Commission guidelines did not, however, automatically result in the same level of fines as at the EU level. In this respect, the current Competition Council appears to be following an approach similar to that of its predecessor, i.e. imposing fines that are not insignificant for the cartel participants, unlike at the EU level. Indeed, whereas the European Commission calculates the basic fine by taking into account at least 15%-18% of relevant sales, multiplied by the number of years the violation continued and increased by an "entry fee" of 15% to 25% of relevant sales, the Competition Council took, in the case at hand, only 1% of relevant sales into account, multiplied by a coefficient of 0.5 (for a violation of  6 months), but with no additional entry fee for cartel practices.

The decision of 20 December 2012 also provides useful guidance as to the limits of joint lobbying  by undertakings on legal issues (which is in principle allowed) and the role of regulators in cartels.

Finally, in the communication accompanying its decision of 20 December 2012, the Competition Council underscored that it does not have jurisdiction to rule on the civil consequences of the sanctioned cartel practices. In this regard, it draws the public's attention to the mediation system put in place between ACA and ULC, which can hear civil actions (such as damages claims), and the jurisdiction of the regular courts over such matters.

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