Swedish Competition Authority Closes Dominance Investigation Into Insurance Company Folksam

The Swedish Competition Authority (“SCA”) has decided to close a long-running investigation into whether insurance company Folksam ömsesidig sakförsäkring (Folksam) was abusing a dominant position by selling below cost. Folksam could have been liable to pay a fine of up to 10% of its annual turnover if the SCA had found it was abusing a dominant position. Compass Lexecon advised Folksam on the economic arguments in the SCA’s investigation.

The SCA assessed whether Folksam had a dominant market position in the supply of certain niche insurance products and whether Folksam had sold such insurance at prices that could exclude rival insurance companies. Compass Lexecon analyzed Folksam’s market position to support the contention that niche insurance products formed part of a wider product market and that Folksam, therefore, could not have a dominant position.

The Compass Lexecon team developed arguments and evidence to demonstrate that it would be easy for rival insurance providers, not currently present in niche insurance, to launch niche insurance products. This threat of entry means that Folksam could in practice not have a dominant position. The team further developed arguments and evidence to demonstrate that there is competition between different distribution channels for niche insurance. Such competition would be inconsistent with Folksam having a dominant position. In its decision to close the investigation, the SCA refers to the ease with which rivals can launch niche insurance products and competition between distribution channels.

Compass Lexecon’s team comprised Pekka Sääskilahti, Mats Bergman, Nadine Watson, Robin Rander, and Mats Holmström. The team worked alongside a legal team from law firm Cederquist, comprising Fredrik Lindblom, Elsa Arbrandt, and Fanny Fernlöf.