The Australian Competition and Consumer Commission has moved to an in-depth Phase 2 investigation of Insurance Australia Group Limited’s proposed acquisition of RAC Insurance, citing concerns that the deal could substantially lessen competition in Western Australia’s insurance markets.
The transaction would combine IAG, one of Australia’s largest general insurers, with RACI, the market leader in Western Australia for both motor vehicle insurance and home and contents insurance. RACI is owned by the Royal Automobile Club of Western Australia and plays a central role in the state’s insurance landscape. Under the proposed deal, IAG would underwrite insurance products distributed under the RAC brand.
According to ACCC Chair Gina Cass-Gottlieb, the regulator is concerned that the acquisition would reduce competition in two critical markets: motor insurance and home and contents insurance. Given RACI’s leading position and IAG’s existing presence, the merger could significantly concentrate market power, potentially affecting prices, product quality, and consumer choice.
The ACCC is also examining potential spillover effects, particularly in smash repair services. Insurers often influence repair networks and pricing, meaning consolidation at the insurance level could have broader implications for related sectors.
The Phase 2 review indicates that the ACCC sees a realistic prospect of competitive harm but has not yet reached a final determination. This stage allows for a more detailed assessment of market dynamics, including input from industry participants. The regulator has invited submissions as part of its ongoing review.
The case also highlights the shift to Australia’s new formal merger control regime, which came into effect in January 2026. IAG had previously sought clearance under the old informal system in 2025, but the ACCC declined to approve the deal at that time. The current review is being conducted under the new framework, which provides for more structured and transparent assessments.
The outcome of this Phase 2 investigation will be closely watched, as it may set an early benchmark for how the ACCC approaches complex mergers under the new regime—particularly in concentrated, essential service markets.
