ECONOMY

Bill raises fears of an oligopoly in the road assistance market

A new bill on road assistance, prepared by the Transport Ministry, is threatening to create another closed market, negating promises of opening up the sector and bolstering competition and instead leading to oligopolistic conditions. The clauses of the new draft law have provoked strong criticism, both from road assistance companies and the insurance sector, in whose exclusive domain this particular economic activity lies. The president of the Association of Insurance Companies – Greece, Fokion Bravos, has sent a letter to Transport Minister Michalis Liapis, asking him to review the entire bill and drawing attention to the violation of key freedoms, such as the provision of services. In a similar statement, four road assistance companies that are active in Greece as branches of mutinational companies (France’s AXA Assistance and Europ Assistance, Spain’s Mapfre Asistencia and Belgium’s Mondial Asistance) speak of the «creation of an oligopolistic situation that will place the level of road assistance premiums out of control, as insurance companies will depend on a specific subcontractor.» This fear stems from a clause in the bill allowing insurance companies to continue their operations in the sector only if they fulfill specific conditions and maintain infrastructure that requires an investment of at least -10 million. For instance, within six months of the law’s promulgation, any insurance company wishing to sell road assistance services will have to have at least 180 tow vehicles, 430 drivers-mechanics and 49 stations across the country. If the company is also active on islands, then on each island it must maintain one road assistance station, two vehicles and four drivers. Closed shops? Market players suggest that «this is a cost that is clearly out of proportion to the needs of the country, and ultimately this will be at the expense of the consumer, who will be required to pay up to three times higher premiums for road assistance.» In contrast with the prerequisites set for all other businesses in the market, mixed companies can only operate in Athens, Thessaloniki and Patras, while being allowed to make local agreements with independent regional partners. Those familiar with the road assistance market note that the legislator has gone a step further by securing for such a mixed company a prescribed rate for its services to which all companies in the sector will have to conform if they want to remain in business.