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Insurers do not distort competition on the auto-body repair market

22-10-2019

Many small auto-body repair businesses have trouble staying afloat. This is not the result of anticompetitive conduct by insurers, but it is rather the result of market developments. This has been one of the conclusions of the Netherlands Authority for Consumers and Markets (ACM) in its study into the market for auto-body repair services.

Martijn Snoep, Chairman of the Board of ACM, explains: ‘Insurers are allowed to negotiate fiercely about rates and other conditions. This leads to innovation and to consumers getting the most competitive offers. Our study shows that there is sufficient competition on the auto-body repair market. It’s mostly the competition and market developments that small businesses have trouble keeping up with. That is not something against which ACM takes action.’

Sufficient other buyers of auto-body repair services

Insurers are important buyers on the auto-body repair market. However, ACM does see other large buyers on this market alongside insurers, such as car-rental businesses, fleet owners, and private individuals. Insurers are therefore not able to distort competition on the auto-body repair market. However, ACM does see that smaller auto-body repair businesses in particular are experiencing difficulties, and that they will have an even harder time in the foreseeable future. This is primarily caused by market developments, such as rapid technological changes, ever-higher quality requirements, and overcapacity in the market.

Study into auto-body repair services market

Following a parliamentary motion in the Dutch House of Representatives, ACM has conducted a study into the market for auto-body repair services. ACM primarily looked into the role of insurers as buyers on this market. Most of the car insurers try to send their clients to repair businesses that they have selected and contracted in advance. ACM looked into the bargaining power of insurers, and whether they are able to dictate rates and conditions. ACM has found that they do not have a dominant position on this market. Furthermore, the way in which they collaborate when procuring auto-body repair services is also not illegal. The competition rules do not offer any protection for businesses that are no longer able to compete effectively in this highly dynamic market.

See also

22-10-2019: Market study into role of insurers on auto-body repair market (in Dutch)