NDRC Fines Zhejiang Insurance Association and 22 Insurance Companies for Price Fixing Under China’s Anti-Monopoly Law

On Sept. 2, 2014, China’s National Development and Reform Commission (NDRC) published 23 administrative penalty decisions made at the end of 2013 against the Insurance Association of Zhejiang Province (Association) and 22 insurance companies doing business in the same province, for a total of more than 110 million RMB (US$18 million).

The NDRC’s investigation revealed that since 2009, the Association had arranged for 23 property insurance companies within Zhejiang province to reach and implement agreements on fixing commercial auto insurance rates and fixing and altering commercial auto insurance agency commissions, both of which violated the Anti-Monopoly Law (AML). The following arguments by the Association were not accepted by the NDRC: 1) the agreements on fixing insurance rates had not been implemented since 2011; and 2) the original intention of agreements on fixing the insurance agency commissions was to protect small and medium-sized insurance companies and increase their competitive capabilities, and at the same time, such agreements would not harm consumers’ interests. The 23 insurance companies that had participated in making and implementing the agreements were also found to have violated the AML.

The NDRC held that the Association was the major planner and organizer of the horizontal price-fixing agreements and thus fined it the maximum amount of 500,000 RMB (US$81,400). Among the 23 insurance companies, one company, which seems to be the first to voluntarily report information regarding the agreements and to provide key evidence, was exempted from punishment. Each of the other 22 companies was fined 1 percent of its sales of commercial auto insurance in 2012. Two of those 22 companies also provided active reporting and key evidence and had their fines reduced by 90 percent and 45 percent, respectively.

The NDRC’s decisions are available here.