Qualifying Insurers Subscribing To ARP & Anor v Ross & Co & Anor

Competition must be assessed by reference to the relevant market as a whole, not by examining the effect of a scheme on an individual trader. An assigned-risk arrangement forming part of a wider professional indemnity insurance scheme is not necessarily a separate market. Where the scheme is, overall, pro-competitive, higher premiums or different conditions within the assigned-risk pool do not alone establish an infringement of the Chapter I prohibition. Nor does participation by competing insurers in the pool establish collective dominance or abuse under the Chapter II prohibition without evidence that the alleged conduct derives from such dominance and affects competition appreciably.

The claimants sought payment of a professional indemnity insurance premium from a solicitor who had failed to obtain qualifying open-market insurance and had consequently been insured through the Assigned Risks Pool. The Law Society was joined as a Part 20 defendant. The solicitor alleged that the scheme, its agreements and its operation infringed the Chapter I and Chapter II prohibitions in the Competition Act 1998.

The Law Society and the claimants applied to strike out or summarily dismiss the defence. The central issues were whether the scheme restricted competition within the relevant market, whether the qualifying insurers collectively occupied a dominant position which had been abused, and whether the defence had a real prospect of success.

1. Chapter I prohibition. The relevant question under section 2 of the Competition Act 1998 was whether competition in the relevant market as a whole was restricted, prevented or distorted to an appreciable extent. The relevant markets were the provision of professional indemnity insurance to solicitors and the provision of legal services. The Assigned Risks Pool was not a separate market but part of the overall scheme.
2. The scheme, viewed as a whole, was pro-competitive because it required solicitors to obtain insurance while leaving them the opportunity to obtain cover from competing qualifying insurers or the market-arrangement provider. The alleged incentive to force solicitors into the pool was unsupported. The insurers remained competitors outside the pool, and there was no evidence of collusion. The premium structure, including the 20 per cent default uplift, was not shown to be excessive in the relevant competition-law sense and did not prevent solicitors obtaining alternative cover.
3. The 2001 restriction on backdating open-market insurance to 30 days did not materially obstruct departure from the pool. Prospective cover remained available, the rebate mechanism was unchanged, and retrospective cover merely evidenced that insurance had existed during an earlier period. There was no evidence that the amendment prevented firms from leaving the pool.
4. Chapter II prohibition. Under section 18 of the Competition Act 1998, there was no real prospect of establishing collective dominance. Each qualifying insurer competed with the others in the relevant market. Their common participation in the pool did not create collective dominance, still less an abuse having an appreciable effect on trade or competition.
5. It was therefore unnecessary to decide whether the Law Society was an undertaking or whether the statutory exemption in Schedule 3 paragraph 5 applied. The defence had no real prospect of success. The more appropriate disposal was summary dismissal under CPR rule 24.2 rather than striking out. The defence was dismissed and judgment was entered for the claimants for £56,847.73 with interest.