Section 431:11-104.4 - Competitive standard(a) The commissioner may enter an order under section 431:11-104.5 with respect to an acquisition if there is substantial evidence that the effect of the acquisition may be to substantially lessen competition in any line of insurance in this State, or tend to create a monopoly therein, or if the insurer fails to file adequate information in compliance with section 431:11-104.3.(b) In determining whether a proposed acquisition would violate the competitive standard of subsection (a), the commissioner shall consider the following:(1) Any acquisition covered under section 431:11-104.2 involving two or more insurers competing in the same market is prima facie evidence of violation of the competitive standards:(A) If the market is highly concentrated and the involved insurers possess the following shares of the market: Insurer A | Insurer B |
4% | 4% or more |
10% | 2% or more |
15% | 1% or more; or |
(B) If the market is not highly concentrated and the involved insurers possess the following shares of the market: Insurer A | Insurer B |
5% | 5% or more |
10% | 4% or more |
15% | 3% or more |
19% | 1% or more |
A highly concentrated market is one in which the share of the four largest insurers is seventy-five per cent or more of the market. Percentages not shown in the tables shall be interpolated proportionately to the percentages that are shown. If more than two insurers are involved, exceeding the total of the two columns in the table is prima facie evidence of violation of the competitive standard of subsection (a). For the purpose of this paragraph, the insurer with the largest share of the market shall be deemed to be insurer A;
(2) There is a significant trend toward increased concentration when the aggregate market share of any grouping of the largest insurers in the market, from the two largest to the eight largest, has increased by seven per cent or more of the market over a period of time extending from any base year five to ten years prior to the acquisition up to the time of the acquisition. Any acquisition or merger covered under section 431:11-104.2 involving two or more insurers competing in the same market is prima facie evidence of violation of the competitive standard in subsection (a) if: (A) There is a significant trend toward increased concentration in the market;(B) One of the insurers involved is one of the insurers in a grouping of the large insurers showing the requisite increase in the market share; and(C) Another involved insurer's market is two per cent or more;(3) For the purposes of this subsection: (A) The term "insurer" includes any insurer or group of insurers under common management, ownership, or control;(B) The term "market" means the relevant product and geographical markets. In determining the relevant product and geographical markets, the commissioner shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners, and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premiums for a line of business, the line being that used in the annual statement required to be filed by insurers doing business in this State, and the relevant geographical market is assumed to be this State; and(C) The burden of showing prima facie evidence of violation of the competitive standard rests upon the commissioner; and(4) Even though an acquisition is not prima facie violative of the competitive standard under paragraph (1) or (2), the commissioner may establish the requisite anticompetitive effect based upon other substantial evidence. Even though an acquisition is prima facie violative of the competitive standard under paragraph (1) or (2), a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under this paragraph include, but are not limited to, the following: market shares, volatility of ranking of market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry and exit into the market.(c) An order may not be entered under section 431:11-104.5(a) if:(1) The acquisition will yield substantial economies of scale or economies in resource utilization that cannot be feasibly achieved in any other way, and the public benefits which would arise from such economies exceed the public benefits which would arise from not lessening competition; or(2) The acquisition will substantially increase the availability of insurance, and the public benefits of that increase exceed the public benefits which would arise from not lessening competition.