The consumer watchdog will not oppose IAG’s proposed acquisition of Wesfarmers’ insurance underwriting business, first flagged in December.
The Australian Competition and Consumer Commission (ACCC) said it had reviewed the proposal carefully, given IAG and Wesfarmers are the first and fifth- or sixth-largest general insurers in Australia, respectively, as well as the largest suppliers of rural insurance products.
"The ACCC found that, while the proposed acquisition would reduce the number of key underwriters from six to five for packaged farm insurance and crop insurance in Australia,
the level of existing and potential competition in this market would be expected to constrain the merged firm," ACCC Chairman Rod Sims said.
"Significantly, no farmer or grower representative associations expressed concerns to the ACCC in market inquiries."
The review focused upon the likely impact of the proposed acquisition in specific markets in Australia where IAG and Wesfarmers both underwrite the supply of various insurance products.
The ACCC also examined how the proposed acquisition may affect competition for the acquisition of key inputs by insurers, particularly smash repair and windscreen repair/replacement services.
The watchdog noted the review particularly focussed on competition in the rural insurance market, given the relative sizes of IAG and Wesfarmers in that market.