ACCC flags competition concern with IAG’s $1.4b takeover of RAC insurance
Make us a preferred source
Make us a preferred source on Google
The news: The competition regulator has flagged that IAG’s proposed takeover of RAC Insurance from the Royal Automobile Club of Western Australia is likely to substantially lessen competition, according to a statement of issues from the Australian Competition and Consumer Commission (ACCC).
The context: IAG announced plans to acquire RAC Insurance for $1.35 billion in May, but the ACCC on Wednesday outlined preliminary competition concerns. Both supply motor insurance and home and contents insurance.
The proposed acquisition “is likely to have the effect of substantially lessening competition in both the supply of motor insurance and the supply of home and contents insurance in Western Australia”, the ACCC said.
The proposed acquisition would result in IAG underwriting motor insurance and home and contents insurance under the RAC brand.
The ACCC said the reduced competition would enable IAG to “limit rival insurers’ access to quality and cost-effective repairers” in Western Australia or increase the cost of rivals acquiring repair services, which is a “key aspect of providing insurance”.
IAG said that the regulator has indicated it is aiming to announced a final decision by 27 November. Submissions in response to the statement of issues can be made until 18 September.
What they said: “RACI competes strongly in Western Australia with its well-recognised brand and focus on customer service. It also appears likely to continue to compete strongly in the future, if the proposed acquisition does not eventuate,” ACCC Commissioner Philip Williams said.
“We are concerned that the acquisition would increase concentration in an already highly concentrated market.”
The sources: ACCC media release, IAG media release
