AXX:ACCC opposes IAG's proposed acquisition of RAC Insurance

Key points

• ACCC opposes IAG's proposed acquisition of RAC Insurance
• Acquisition would substantially lessen competition in Western Australia
• IAG and RACI are effective competitors in the region
• ACCC lacks evidence for concerns about smash repair services

Full summary

The Australian Competition and Consumer Commission (ACCC) has decided to oppose Insurance Australia Group Limited's (IAG) proposed acquisition of RAC Insurance (RACI). After a thorough Phase 2 assessment, the ACCC concluded that the acquisition would substantially lessen competition in the supply of motor vehicle insurance and home and contents insurance in Western Australia. IAG, one of the largest personal insurers in Australia, and RACI, the market leader in Western Australia, both supply these insurance products. The ACCC found that the acquisition would increase IAG's market share significantly, potentially leading to a reduction in competitive constraint. The ACCC also considered concerns about the market for smash repair services but did not find sufficient evidence to support these concerns.