The Australian Competition and Consumer Commission (ACCC) is calling for industry views on the proposed acquisition of the Royal Automobile Club of WA (RAC) general insurance business by Insurance Australia Group Limited (IAG).
IAG and RAC Insurance (RACI) both provide general insurance, including motor insurance. The ACCC’s investigation is focused on the impact of the proposed acquisition on competition in Australia and, in particular, in Western Australia.
In a letter to interested parties, ACCC outlined the following as the key criteria for consideration in its investigation.
- how closely IAG and RACI compete in the supply of personal lines general insurance
- the extent to which alternative suppliers of insurance, including motor insurance would competitively constrain the merged entity
- the likely impact of the proposed acquisition on prices and quality of insurance, including motor insurance products
- the likely impact of IAG’s increased scale on the acquisition of ancillary repair services, including the impact on prices or terms of supply for suppliers.
The legal test the ACCC applies when assessing mergers and acquisitions is in section 50 of the Competition and Consumer Act 2010. Section 50 prohibits acquisitions that are likely to have the effect of substantially lessening competition in a market.
Responses are required by July 2, 2025 via email to mergers@accc.gov.au with the title: Submission re: IAG - RACI. If you require more time to respond, please let us know.
Many in the industry remain sceptical if the ACCC will stand in the way of the proposed merger being that it has allowed similar mergers to go through unhindered recently, including Allianz’s takeover of RAA’s insurance arm in South Australia and the IAG’s merger with RACQ’s insurance business in Queensland.