Contribution to economic welfare Sample Clauses

Contribution to economic welfare. As the main goal of competition policy, the concept of economic welfare is materialized under Article 101(3) TFEU in terms of “improving the production or distribution” or “promoting technical or economic process”. The restricted quotation and minimum cost for tankers essentially both are price measures of P&I insurance. Whether these rules on the retention level, outside the Pooling Agreement, can contribute to economic welfare should be assessed in view of premium setting of P&I insurance. Insurance premium is a typical cyclical market, where “prices are pushed down due to fierce competition between rival insurers, for many of whom the distinction between market share and profitability has become blurred”85 until losses become apparent. In the field of P&I insurance, mutual associations underwrite “at cost” and profit is not included in the computation of calls. The basic equation for underwriting is that calls plus 84 Ibid. 26 p.156 85 Ibid. 37 p.57 investment income should equal claims plus expenses plus reinsurance premiums.86 In fact, the principle of “at cost” without profit making is more likely to be jeopardized by price-cutting rather than pricing fixing. When free pricing prevails in the P&I insurance market, anarchy is foreseeable under ultra competition and does no good to sustainability of the supply on the basis of cost. The restricted quotation and minimum cost for tankers are designed to guarantee net premium on the basis of cost, which is highly linked to loss claims ex post and ex ante. Even on the retention level, such rules avert the feast or famine cycle of price and thereby endow the supply of P&I insurance with predictability and stability. Furthermore, by means of a high degree of linkage between premium and risk, the restricted quotation and minimum cost for tankers create incentives for loss prevention with due diligence, and consequently better safety performance by the shipowners in seaborne trade. Less damaging incidents occur at sea, and the economic process enjoys more efficiency. In the appraisal of contribution to economic welfare, different approaches were adopted by the 1985 and 1999 Commission Decisions, but neither of them seems to be laudable in retrospect. The 1985 Commission Decision contended that “improvement in production or distribution” of insurance service was satisfied.87 However, the reasoning to this positive condition was then virtually subject to the negative condition “indispensability of restriction”. S...