Competition: Unprecedented visa for the Sanlam-Allianz deal
The Competition Council gave the green light, on June 5, 2023 in Rabat, for an operation of economic concentration in the insurance industry. Sanlam Limited and Allianz SE have taken joint control of ”Main Street 1889 Proprietary Limited”. A new entity, Sanlam Allianz Africa, will emerge from this operation. Let the «competitors» be reassured! There will be no new market entrant, unlike other African countries. “The two groups are creating this subsidiary in South Africa. It will oversee their continental activity except for Morocco and South Africa due to serious competition problems”, according to a connoisseur of the file who wished to remain anonymous. Consequently, this deal was subject to “behavioral and structural commitments” at the initiative of the parties, commitments “made compulsory by the Competition Council”, said the standing commission of the Council in a press release. The investigation service analyzed the project of economic concentration on documents. Its investigation lasted 8 months taking into account the legal deadlines. The complete application was delivered in October 2022. The parties had previously to provide additional information on their project. As a result, the investigators suspended the processing time on the basis of Article 15 of the law on freedom of prices and competition: 20 more days were added to the 60 days in force in the event of commitments.
Sanlam and Allianz’s operation has been subject to “thorough scrutiny”. The two insurers initially pledged to keep their Moroccan companies separate. The regulator ruled out any competition concerns in the field of life insurance and reinsurance. Allianz has a reinsurance license but is “not active” in this market or in that of policyholder assistance. Each of the companies distributes its products through its direct management agencies, independent agents, and brokers. The new entity – Sanlam Allianz Africa – has “moderate market shares” in life insurance and reinsurance where there are no “competition problems”. This is not the case in non-life insurance: fire, accidents, and miscellaneous risks. The proposed economic concentration was likely to harm competition in the distribution of some of its products in small and medium-sized cities, particularly in the south of the Kingdom, according to our investigations, in c.cities where there are not enough distributors and where the new entity has «strong market shares» in non-life insurance. The outcome of the operation would have led to “the absence of a sufficient alternative offering”, thus consecrating a dominant position and therefore the risk of abuse. The two companies will have to “possibly transfer distribution points for their insurance products”, according to our information. The insurance sector remains “moderately concentrated in terms of number of operators and market share”, according to the 2021 report on financial stability published by the central bank (Bank Al-Maghrib), the Insurance and Social Welfare Authority (Acaps), and the capital market regulator (AMMC).
Faiçal FAQUIHI
