Australia’s competition watchdog said on Thursday that Insurance Australia Group’s proposed A$1.35 billion ($877.23 million) acquisition of The Royal Automobile Club of Western Australia’s insurance business could reduce competition.
The Australian Competition and Consumer Commission said the deal would result in the company underwriting motor and home insurance under the RAC brand, potentially weakening competition in Western Australia’s insurance market.
It added that reduced competition could allow IAG to raise premiums and lower the quality of both its own and RAC’s insurance offerings.
“The ACCC is also concerned that the proposed acquisition may enable IAG to limit rival insurers’ access to quality and cost-effective repairers in Western Australia or increase rivals’ costs of acquiring repair services in the state,” the regulator said.
IAG, in a separate statement, acknowledged the ACCC’s concerns and said it would continue to engage with the regulator.
The Sydney-based insurer is seeking to expand its footprint in Western Australia through the deal, which was announced by IAG in May.
Founded in 1905, RAC is a Perth-based motoring club offering services such as roadside assistance, insurance, travel, driver training and member benefits.
Source: Reuters.com