Competition Commission mulls IAG and Wesfarmers deal

Competition Commission mulls IAG and Wesfarmers deal

Competition Commission mulls IAG and Wesfarmers deal The Australian Competition and Consumer Commission is conducting an informal review into the acquisition of Wesfarmers’ underwriting business by IAG with a view to publishing provisional findings on 27 March.

As reported last month, Wesfarmers has sold its underwriting arm to IAG for $1.845bn, which includes WFI and Lumley.

A letter by the ACCC states it is considering the proposed acquisition under section 50 of the Competition and Consumer Act 2010. Section 50 of the Act prohibits mergers and acquisitions that substantially lessen competition in a market, or are likely to do so.

The ACCC is conducting the review under its mergers register. Interested parties can make submissions up until 3 February. A spokesman for IAG told Insurance Business it has made a submission.

Concerns have already been raised regarding the acquisition with some market observers fearing it will create a duopoly.

Meanwhile, it is still unclear what will happen to the Lumley executive team as a result of the acquisition. A spokesman for IAG said that it is too soon to comment on such matters and that it would work through it as part of the integration process.
 
12 Comments
  • Jak 8/01/2014 9:37:12 AM
    What the !!
    So the sale has been completed, but only now is the ACCC conducting an informal review.
    Let's face it, the ACCC could not track an elephant with bleeding hemorrhoids through a snow field, so its informal review is as likely to do anything other than confirm the sale, and duplicate the ACCC's stellar achievements with such other coporate duopolies as, say, Woolworths and Coles.
    The ACCC announcement is simply another tax payer funded 'Yes Minister' episode.
    Humbug, and welcome to 2014 !
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  • Brave Broker 8/01/2014 9:37:14 AM
    Based on Lumley's performance or lack of it over the past 5 years I can tell you what I think should happen to the Lumley Executive Team!

    A bunch of people who are sending BDM's round to broker offices trying to flog "The all new Office Package" when others have been playing with the class for 10+ years should be fired! This is only the latest laugh I have had at Lumley's expense over the past twelve months! They are such a basket case that surely brokers can't be thinking it will cause a monoply. They have been insignificant for 5 plus years! Bring back the old MMI crew!

    One the ACCC can not loose sleep on, surely.

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  • Bill Oddie 8/01/2014 10:11:46 AM
    Saying it creates a duopoly (such as Coles and Woollies), is really a smack in the face to the other competitors in Australia. Besides from which, the larger they are, the larger target they become for those focussed niche players. It seems most insurers only operate in certain regions and specific product offerings that they want to anyway. Its also probably better than ending up with another HIH...
    The real battleground will be NZ where Lumley is about the only insurer currently not committed to the AON CPF 'bucket' (which is deemed to be about NZ's 3rd largest 'insurer'), and potentially IAG's recent purchase of AMI.
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