Insurance Australia Group Limited's (ASX: IAG) proposed acquisition of RAC Insurance (RACI) could substantially lessen competition and requires an in-depth Phase 2 assessment, the ACCC has decided.
RACI is owned by the Royal Automobile Club of Western Australia (RAC). IAG and RACI both supply motor insurance and home and contents insurance in WA. The acquisition would result in IAG underwriting motor insurance and home and contents insurance under the RAC brand.
"This acquisition would combine two of the biggest insurers in WA," ACCC Chair Gina Cass-Gottlieb said.
"RACI is WA's market leader both in motor vehicle insurance and in home and contents insurance."
"We consider the acquisition could substantially lessen competition in both the supply of motor vehicle insurance and the supply of home and contents insurance in Western Australia".
The ACCC is also considering the impact of the acquisition in relation to smash repair services.
The ACCC has not reached a conclusion on the issues and will continue to consider the acquisition in Phase 2.
