Discovery is part of the companies that have participated in collusive practices to fix prices and trading conditions in South Africa, according to the competition commission.
(Delwyn Verasamy/M&G)
The Competition Commission said on Thursday it has “reasonable grounds” to suspect that eight insurance companies have participated in collusive practices to fix prices and trading conditions in South Africa.
The companies are BrightRock Life, Discovery, FMI — a division of Bidvest Life — Hollard, Momentum, Old Mutual Insure, Professional Provident Society and Sanlam.
The suspected collusion is in respect of fees for investment products such as retirement annuity and premiums for risk related products, namely, life insurance cover for dread disease, disability and life and funeral assistance benefits.
“According to the information at the disposal of the commission, the companies under investigation share information on premium rates for risk-related products and fees for investment products, which enables them to adjust the prices of their existing and new insurance products,” said the commission in a statement.
This is in contravention of section 4(1)(b)(i) of the Competition Act, which prohibits any agreement, concerted practice or decision by an association of competitors that involves directly or indirectly fixing a purchase or selling price.
The commission is conducting search and seizure operations at the premises of these insurance companies in Gauteng, KwaZulu-Natal and the Western Cape. It said it will seize documents and electronic data, which will be analysed together with other information to determine whether these firms have contravened the Act.
This is part of an ongoing investigation initiated at the start of the year, the commission said.
“The search and seizure operation is part of the routine process of evidence gathering and we urge all involved to allow the investigation to run its course. The commission will at an appropriate stage reveal the outcome of the investigation,” said commissioner Tembinkosi Bonakele.
Investigations on collusion in the financial services industry in South Africa are not rare. The commission has previously brought a case against 17 local and international financial institutions for collusion in the foreign currency markets.
The banks include Barclays’ local arm, Absa, Standard Bank and Investec, as well as the international banks JP Morgan Chase, BNP Paribas and Standard Chartered, the Mail & Guardian previously reported.
The commission sought for the banks to pay an administrative penalty equal to 10% of their annual turnover.
Anathi Madubela is an Adamela Trust business reporter at the M&G.