Francisco Marcos

Abstract

Inherent Defects Insurance (“IDI”) for new housing buildings has been mandatory in Spain since 2000, prompting significant growth in the IDI market in the years that followed. Facing increased competition, major insurance carriers active in the property insurance market formed a cartel that also involved IDI reinsurers. This article examines the features of the Spanish IDI cartel as uncovered by the National Competition Commission (“NCC”) in 2009. The companies involved were fined over €120 million—the largest fine ever imposed by Spanish competition authorities. The article describes how the cartel was organized and operated, emphasizing the reinsurers’ key role in ensuring and propagating the effectiveness of the minimum price agreement across the property insurance market. It also critically analyzes the NCC’s assessment of the cartel and evaluates how the Commission addressed the reinsurers’ arguments in defense of their conduct.

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