The Australian Competition and Consumer Commission (ACCC) has announced its decision to oppose the proposed acquisition of RAC Insurance Pty Limited (RACI) by Insurance Australia Group Limited (IAG). The ACCC's investigation revealed that the merger would likely lead to a substantial lessening of competition in the motor vehicle and home insurance markets in Western Australia.

RACI is recognized as the market leader in both motor vehicle and home insurance in the region, known for its competitive pricing and high-quality service. In contrast, IAG is one of Australia's largest personal insurers, with a significant presence in Western Australia through its NRMA brand.

The merger would result in IAG controlling approximately 55 to 65 percent of the motor vehicle insurance market and 50 to 60 percent of the home insurance market in Western Australia. The ACCC expressed concerns that this would eliminate significant competition between IAG and RACI, potentially allowing IAG to increase premiums and reduce the quality of its insurance products.

Despite the presence of other insurers in the market, the ACCC concluded that they would not be able to sufficiently counteract the loss of competition resulting from the acquisition. The commission also assessed RACI's ability to compete independently and found it well-positioned to manage industry challenges, including rising costs and extreme weather events.

Furthermore, the ACCC examined whether the acquisition would enable IAG to restrict access to repair services for competing insurers but found limited evidence to support this concern. The ACCC's findings highlight the importance of maintaining competitive dynamics in the insurance sector to protect consumer interests.