Product Marketing and Distribution

Insurers market and distribute their products by a variety of means.
The most common are (1) the use of independent agents, or producers,
representing multiple insurers; (2) the use of exclusive agents representing
a single insurer; (3) independent brokers, who sometimes or in some
respects represent the insureds or prospective insureds; and (4) so-called
“direct writing” or “direct marketing,” by which the insurer sells directly
to customers without an agent or broker.
Because insurers compete for agents’ services, and agents compete to
represent insurers, horizontal agreements between competing insurers or
agents to limit such competition can pose special antitrust concerns.
Likewise, horizontal agreements with respect to brokers competing for
policyholder or carrier business can pose antitrust concerns. Furthermore,
vertical dealings between an insurer and its agents or an insurer and
brokers, such as an insurer’s prohibition on agent rebating of commissions,
also can present antitrust problems.
The discussion below separately addresses these four areas of
concerns, analyzing both the lawfulness of insurer practices absent an
exemption and the availability of McCarran-Ferguson Act445 or state
action immunity.
A. Horizontal Agre ements
1. Agreements Between Agents
Without immunity, agreements between competing agents on the
commissions demanded from insurers would be per se unlawful price
fixing. No defense would be available on the grounds that collaboration
was necessary to counteract the superior bargaining power of large
Both the Department of Justice (DOJ) and the Federal Trade
445. 15 U.S.C. §§ 1011-1015.
446. Cf. Int’l Healthcare Mgmt. v. Hawaii Coal. for Health, 332 F.3d 600, (9th
Cir. 2003) (affirming dismissal of managed health care plan’s claims of
group boycott and conspiracy relating to fees); United States v. Alston, 974
F.2d 1206, 1214 (9th Cir. 1992) (“individual health care providers are
entitled to take some joint action . . . to level the bargaining imbalance”
104 Insurance Antitrust Handbook, 3d Ed.
Commission (FTC) regularly have brought criminal or civil actions against
professionals accused of fixing their fees.
Agreements between agents not to rebate their commissions would
also be per se unlawful in the absence of immunity or state law prohibitions
on rebating. An agreement not to rebate is tantamount to an agreement not
to discount, which constitutes illegal price fixing.
Similarly, allocations
of customers, territories, and markets by competing agents or insurers
would be per se unlawful.
The per se rule generally is applied to “joint efforts by a firm or firms
to disadvantage competitors by ‘either directly denying or persuading or
coercing suppliers or customers to deny relationships that competitors
need in the competitive struggle.’”
The FTC has taken enforcement
action against an independent agent association that proposed a boycott of
an insurer that had adopted a direct marketing program making the insurer
a competitor of the agents.
Additionally, any boycott in aid of a price-
related objective, such as a group refusal to deal with insurers paying low
commissions, or an agreement to demand that an insurer terminate a
rebating agent, would also be subject to condemnation under the per se
with prepaid medical plans as long as such action falls “short of price
447. See, e.g., Alston, 974 F.2d at 1207 (criminal charges against dentists); FT C
v. Superior Court Trial Lawyers Ass’n, 493 U.S. 411 (1990) (civil action
against attorneys re fusing to deal with ci ty government in or der to coerce
increase in public defender fees).
448. See Catalano, Inc. v. Target Sales, 446 U.S. 643, 648 (1980) (agreement to
eliminate interest-free credit was per se illegal because it was “equivalent
to giving a discount eq ual to the value of the use of the p urchase price for
that period of time”); see also United States v. Beaver, 515 F.3d 730, 737-
38 (7th Cir. 2008); United States v. Am. Radiator & Standard Sanitary
Corp., 433 F.2d 174, 185-88 (3d Cir. 1970).
449. See Palmer v. BRG of Ga., Inc., 111 S. Ct. 401, 402-03 (1990); United
States v. Topco Assoc., 92 S. Ct. 1126, 1134 (1972); In re Cardizem CD
Antitrust Litig., 332 F.3d 896, 907 (6th Cir. 2003); United States v. Consol.
Laundries Corp., 291 F.2d 563, 574 (2d Cir. 1961).
450. Northwest Wholesale Stationers v. Pacific Stat ionary & Printing Co., 472
U.S. 284, 294 (1985) (citations omitted).
451. Independent Ins. Agents of Am., 108 F.T.C. 87 (1986).
452. Superior Court Trial Lawye rs Assoc., 493 U.S. at 436 n.19 (applying per
se rule to alleged agree ment involving “[n] ot only a boycott but al so a
horizontal price-fixing arrangement”).

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