The European Commission has decided to take the Italian government to court over its decision to freeze the level of motor insurance premiums. The Commission said Italy had failed to withdraw the measure even though the Commission had already said it was incompatible with the Third Non-life Insurance Directive establishing the right of establishment and freedom to provide services in the motor vehicle sector.

The Commission said it stood by its opinion that the price freeze "does not form part of a general price-control system that might justify the obstacles to the unrestricted marketing of insurance products and is not justified either by public interest considerations."

Italy said the price freeze was part of a general crackdown on motor insurance in which it had imposed a pounds 220 million fine on 38 companies for exchanging information that would allegedly restrict competition. The Commission said however that Italy was not entitled to impose a fine that applied to all insurance companies doing business in the country.