The Australian Competition and Consumer Commission has approved IAG’s acquisition of Wesfarmers’ underwriting business.
The Australian Competition and Consumer Commission has today said that it will not oppose IAG’s proposed acquisition of Wesfarmers’ insurance underwriting business, stating that Wesfarmers’ underwriting personal products does not “materially change competitive dynamics”.
IAG proposed, in December, to buy Wesfarmers' underwriting arm, which operates under the Lumley and WFI brands in New Zealand, for $1.845bn.
The ACCC has closely reviewed the proaposed acquisition as IAG and Wesfarmers are the first and fifth or sixth-largest general insurers in Australia, respectively, and the largest suppliers of rural insurance products.
Rod Sims, ACCC Chairman, said: “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.
“The ACCC concluded that the proposed acquisition is unlikely to substantially lessen competition in any insurance market or in relation to IAG’s acquisition of smash repairs or windscreen replacement services.
“Therefore, the ACCC has decided not to oppose the proposed acquisition.”
IAG Managing Director and Chief Executive Officer, Mike Wilkins, welcomed the ACCC’s approval as a significant milestone on the path to successfully completing the acquisition in Australia and New Zealand. “Bringing together the businesses will provide us with enhanced capabilities to meet the needs of our customers and partners and provide them with a broader product offering,” he said.
Ealier this week, the New Zealand Commerce Commission requested another month to consider its decision.
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