The Australian Competition and Consumer Commission (ACCC) has rejected Insurance Australia Group’s (IAG) proposed acquisition of The Royal Automobile Club of Western Australia’s (RACI) insurance business. The $1.35 billion deal, announced in May, was deemed likely to substantially lessen competition in the supply of motor vehicle, home, and contents insurance within Western Australia. IAG intends to lodge an application with the ACCC for assessment of the alliance under the new mandatory merger control regime.
ACCC Chair Gina Cass-Gottlieb stated that the acquisition would eliminate significant competition between IAG and RACI. She added that the reduction in competitive pressure would affect rival insurance brands. The ACCC was concerned that IAG, having acquired RACI, could potentially increase premiums and reduce the quality of its insurance products, which could impact the offerings of other insurers.
Insurance Australia Group (IAG) is a general insurance company operating in Australia and New Zealand. The Royal Automobile Club of Western Australia (RAC) provides various services, including insurance, to its members in Western Australia. IAG’s CEO Nick Hawkins believes the alliance would improve the RAC member experience and provide greater resilience to industry challenges. He stated that IAG and RAC have successful partnerships and are dedicated to delivering competitive and accessible insurance products for Western Australians.
This decision contrasts with a similar IAG deal with the Royal Automobile Club of Queensland, which was not opposed earlier this year, allowing IAG to expand in Queensland.
