The Australian Competition and Consumer Commission will not intervene in the proposed acquisition of Promina Group Ltd by Suncorp Metway Limited, ACCC Chairman, Mr Graeme Samuel, said today.
"Market inquiries indicated that if the merged firm attempted to raise prices above competitive levels, existing competitors including small to medium sized players would be well placed to win customers from it. These existing competitors, and the threat of new entry, are likely to act as a strong competitive constraint on the merged firm. As a result, the ACCC does not consider that the acquisition will allow Suncorp to profitably raise premiums or diminish its level of service".
"The ACCC considers that the proposed acquisition is unlikely to substantially lessen competition in any of the markets for various lines of personal insurance, the market for commercial insurance lines, or the markets for the other financial products and services offered by Suncorp and Promina".
The ACCC investigation focussed on personal insurance lines, particularly CTP and motor vehicle insurance in Queensland, and home insurance nationally, as well as on suppliers of services to insurance companies, after it quickly became apparent that in the case of commercial insurance lines and the other financial products offered by Suncorp, there are a large number of other competitors who would be able to constrain the merged firm.
"The ACCC conducted a comprehensive investigation, including extensive discussions with many industry participants", Mr Samuel said. "In relation to the main personal lines, the ACCC formed the view that the merged firm will be constrained by existing and potential new entrants since barriers to entry and expansion, such as brand loyalty, are not insurmountable. In particular, a number of major banks have used their existing brands, branch networks and customer relationships to expand their insurance distribution operations and move into insurance manufacturing in recent years. They appear well placed to strengthen their position in home and motor vehicle insurance, particularly if the larger players attempt to increase prices".
The ACCC will be publishing a Public Competition Assessment in due course, which will be available on the ACCC website, under Mergers.