Insurers accused of anti-competitive practices

The Romanian Association of Automobile Car Parts Distributors (ADPAR) has warned the Competition Council on the violation of the Law of Competition and on the use of illegal and unfair competitive practices by Romanian insurance companies.

The representatives of the ADPAR are unhappy that some of the insurance companies, operating in the mandatory civil liability policies, have only concluded contracts with certain service shops and distributors of auto spare parts, thus preventing competitors from entering this market.

"We urgently request that an investigation be launched and that the use of these practices be sanctioned in order to put a stop to them, in order to ensure a normal competition environment on the market for car spare parts, or else we could see insurance companies fully take over the trading of car spare parts, and the activity of distributors and service shops would be limited to the mere manipulation of spare parts", the letter of the ADPAR states.

The Association of Automobile Specialists of Romania (ASAR) has expressed its support for the actions of the ADPAR.

Victor Balaş, the vice-president of the ASAR, said: "The Association of Automobile Specialists of Romania - ASAR - fully supports the actions of the Association of Auto Distributors of Romania - ADPAR. Thus, importers and car repair shops join forces for the first time in their fight for an open market and for ensuring a healthy business environment. In March, the ASAR has begun a campaign to identify the receivables of the insurance companies, which helped solve many of the issues which were reported. However, in order to be truly successful, the only solution is for two of the major players of the automobile market to join forces: importers and car repair shops".

Independent car service shops, even the authorized ones, are being prevented by insurers from buying spare parts for the purpose of reselling them, to their customers, thus being confined to repairs and handling spare parts, according to the letter of the distributors of spare parts.

The representatives of the ADPAR warn that spare parts are being bought by insurers, which unlawfully place orders on behalf of their policy holders exclusively with certain agreed distributors. Furthermore, the purchasing of the spare parts is controlled by the insurers through specialized software platforms which use databases, according to the members of the ADPAR. It is the insurers that pay the equivalent value of the spare parts directly to the authorized distributor, disregarding art. 55 of the Law no. 136/1995 and art. 64 paragraph (1) of the Norms concerning mandatory insurance, which provides that the payment for the parts must be made by policy holders or by the service shops themselves, precisely in order to prevent insurance companies from behaving inadequately or from going beyond their regular line of business, which is strictly delimited by the law, according to the document.

Furthermore, in order to buy spare parts, insurance companies charge certain fees, commissions, and bonuses from distributors and even commissions for missing the due date for the payment of the spare parts delivered by distributors, "even though according to art. 36, paragraph 1, of the Regulations, the claim must be paid within a maximum of 10 days from the date of the filing of the last document needed to appraise the damage, which proves the deeply commercial nature of the purchasing/intermediation activities of the insurance companies, which thus blatantly violate the legal provisions of art. 12 paragraph (4) of the Law no. 32/2000), which prohibits insurance companies from performing any activities other than insurance".

The representatives of the ADPAR claims that the insurers" practices will lead to the elimination of the independent car service shops from the market and preventing any spare part distributor from entering the market. Furthermore, this will lead to a tight control over prices and the hourly fees, due to the way the software platforms operate, the members of the ADPAR claim. This will also force policy holders to pay extraneous services or fees, which will negatively affect their legitimate rights and interests, and moreover, the indemnees will be prevented from choosing the car repair shop that they want to work with, the representatives of the ADPAR said.