The European Commission has approved the operation by which AXA will acquire sole control of UAP via an offer for exchange of shares, covering the whole of UAP shares. The new French group AXA/UAP will be active in the markets for life and non-life insurance, reinsurance and in financial services and will become a leading European insurer in terms of premium income, alongside other major players, such as Allianz (Germany), and Generali (Italy). The Commission considers that the operation could create risks of a dominant position emerging but indicates that it has taken into account the capacity for customer demand to stimulate competition among the insurance companies as well as the presence of other competitors on the market. The Commission has therefore decided to declare the operation compatible with the Common Market. In France and Belgium, where the new group will have the strongest presence, its market share will rise to about 15% of the whole insurance sector, including both life and non-life. On the particular areas of civil liability, travel insurance/breakdown cover, and industrial accident, AXA/UAP will attain market shares of the order of 30%. The Commission considers that the accumulation of such market shares by parties who are already market leaders in their own national markets, at a time when the shares of their immediate competitors are likely to remain relatively modest, could, in certain circumstances, create the risk of a dominant position emerging. Nevertheless, in the present case the Commission has decided that, given that this operation affects particularly the market for insurance directed at business clients, it is desirable to take account of the capacity for customer demand to stimulate competition among the insurance companies. There will remain numerous competitor firms, including several who will be well placed to constrain the market power of the new group. These include the mutual societies in France, who in recent years have gained market share at the expense of insurance companies. Morever the market penetration by groups of comparable power, such as Allianz, Generali or Zurich, will exert competitive pressures which can only increase, given the liberalisation already seen in these areas. ***
