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Netherlands Competition Authority Rules in Favor of Carglass in Insurer/Rebate Dispute

Post Time:Sep 07,2011Classify:Industry NewsView:309

 

The Netherlands Competition Authority (known as the NMa) recently issued a ruling in favor of Carglass Netherlands, three years after a competitor, Auto Mark BV, filed a complaint against the company. The complaint alleged that the rebate system that Carglass, a Belron-owned company, uses in its relationship with insurers abuses its dominant position in the nation's auto glass market, according to the NMa's recent ruling.

 

NMa looked at the company's position in the market and says it found that Carglass holds approximately a 40 percent market share, which NMa did not deem as dominant-negating the need to look at the rebate abuse claim, according to the decision.

 

In making their decision, NMa officials say they studied a variety of aspects of the auto glass repair and replacement industry, such as the size of the Netherlands' auto glass market and the role insurers play in the auto glass market. NMa suggests that, in general, insurers are facing rising claims, and attributes this to possible fraud and also auto glass companies' sales initiatives, such as approaching drivers in high-traffic areas.

 

NMa also suggests claims are on the rise due to national advertising that educates drivers on the dangers of windshield damage.


NMa follows its look at how insurers' role in auto glass with a look at how they are responding to rising claims. In its complaint, Auto Mark suggested that one way insurers limit claims is through their relationships with "approved" companies or refusing to reimburse invoices from "unapproved" businesses.

 

NMa also looked at insurers' negotiation capabilities, and quote officials from Netherlands-based Glass Garage, who suggested that insurers' involvement in the market is creating a downward pricing trend for auto glass businesses.

 

However, Auto Mark alleged in its complaint that an insurance paradox also exists, and that insurers are colluding to operate nationwide chains to keep auto glass prices artificially high, according to NMa. NMa ruled that this is implausible, though, as more likely insurers would negotiate lower costs to keep premiums low. NMa also responded to this claim with an argument that price is not the only factor of competition, and that other items come into play-such as 24-hour service, mobile service, etc.

 

Despite the variety of research included in the NMa decision, ultimately the group ruled that there was insufficient evidence that Carglass holds a dominant economic position.

 

The original complaint was filed in November 2008, and in September 2009 rejected Auto Mark's request for action against the company; Auto Mark appealed that decision in October 2009, leading to the recent decision.

 

Source: http://www.glassbytes.comAuthor: shangyi

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