The competition regulator has started a new assessment of IAG’s plan to acquire RAC underwriting after the insurer lodged an application under a revamped merger regime that began in January.

The Australian Competition and Consumer Commission has asked for responses to a questionnaire by next Thursday and expects to complete an initial assessment by April 17.

In December, the commission opposed the $1.35 billion acquisition under previous regulatory arrangements, meaning IAG had to reapply under the new regime to continue pushing its case.

IAG CEO Nick Hawkins confirmed at the half-year financial results last month that the company was committed to forming a strategic alliance with RAC.

“The partnership will preserve the much-loved, local RAC brand and WA-based services,” he said. “We will continue to invest in the RAC member experience and deliver high-quality, competitive insurance products for Western Australians.”  

The new competition assessment regime – which uses the same underlying legal test – aims to be more efficient and widens the net to ensure deals do not slip through without scrutiny.

Under the process, issues flagged in the initial assessment may trigger a second-phase review that could take up to 90 business days.

Businesses can lodge a public benefit application if they think some factors outweigh likely detriments such as reduced competition.

“The ACCC will consider every notification on its merits, including previously opposed transactions under the informal regime, taking into account the information provided as well as other information available,” a spokesperson told insuranceNEWS.com.au.

Parties dissatisfied with the ACCC outcome can seek a review by the Australian Competition Tribunal, which must make findings within 90 days, subject to extensions.

In December, the ACCC said the proposed deal would give IAG market shares of about 55%-65% in motor and about 50%-60% in home and contents in WA.

“We concluded that the proposed acquisition would eliminate the significant competition between IAG and [RAC insurance] and reduce the competitive pressure they each place on rival insurance brands,” chair Gina Cass-Gottlieb said.

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