The Motor Trades Association of Australia says it has examined IAG’s draft undertaking to ease market concerns over its plan to buy WA motoring group RAC’s insurance business, and it remains opposed to the deal.

The association notes additions have been made to the initial “remedy offer”, such as giving RAC the right to appoint an alternative insurer if RAC-branded products fail competitiveness reviews. 

“MTAA recognises these additions,” the industry body said in a submission to the competition watchdog. “They demonstrate that IAG and its advisers have engaged with the compliance architecture needed for a behavioural remedy.

“However, our fundamental position remains unchanged: the acquisition should not proceed. The likely competitive harm is structural and permanent.

“No behavioural undertaking, however carefully drafted, can replicate the independent competitive constraint that [RAC Insurance] currently provides in WA.”

The Australian Competition and Consumer Commission is conducting a phase-two review of the deal and consultation on IAG’s draft undertaking of its remedy offer closed last month.

MTAA says the IAG undertaking is “entirely silent” on repair pricing.

“This is the primary mechanism through which insurer market power affects repairer viability,” the submission said.

It says many of MTAA’s other concerns have not been addressed.

“The ACCC should not assess this undertaking in isolation,” the association said. “MTAA is already receiving reports from industry stakeholders that the effects of Allianz’s acquisition of the RAA insurance business are becoming apparent in SA, including reduced consumer choice, the effective concealment of consumers’ right to choose their own repairer, and increased aggression in engagement with local collision repairers.

“This pattern is consistent with MTAA’s long-standing concern that multinational insurers, once they acquire the trust and market position of a regional motoring club brand, use that position to exert greater leverage over small repair businesses.”