ACCC launches Phase 2 review of IAG-RAC takeover bid

The news: The Australian Competition and Consumer Commission (ACCC) has commenced an in-depth Phase 2 review of Insurance Australia Group’s (IAG) $1.4 billion takeover proposal of RAC Insurance (RACI).

The context: This follows the regulator’s decision not to clear the takeover bid announced last year, citing concerns the acquisition would leave IAG with market shares of around 55-65% in motor vehicle insurance and 50-60% in home and contents insurance in Western Australia.

The ACCC also said that it is continuing to assess the impact of the proposed takeover on smash repair services, and has not yet reached a final conclusion, as its consideration of the acquisition is ongoing.

What they said: “The acquisition would combine two of the biggest issuers in WA. We consider the acquisition could substantially lessen competition in both the supply of motor vehicles insurance and the supply of homes and contents insurance in Western Australia,” ACCC chair Gina Cass-Gottlieb said.