ACCC blocks RAC deal and weighs public benefit, with decision due on 1 February 2027
Key Facts
10 November does not mark a new ruling by the Australian Competition and Consumer Commission on IAG’s acquisition of RAC’s insurance business. The regulator decided on 23 September 2026 to block the deal after a Phase 2 review. It concluded that the acquisition would substantially lessen, or be likely to substantially lessen, competition in car insurance and home and contents insurance in Western Australia. Since that decision, the matter has moved to a separate public benefit assessment, after IAG applied on 13 October. No final ruling has been made in that process on whether the proposed benefits are sufficient. Under the extended timetable reported by Insurance News, a decision is expected on 1 February 2027.
Competition concerns were based on the companies’ positions in Western Australia’s market. According to the statement of reasons, RAC Insurance is the state’s largest car insurance provider, while IAG ranks third. The regulator estimated that IAG’s combined share after the deal would be about 55–65% in car insurance and about 50–60% in home and contents insurance. If the deal proceeds, IAG intends to underwrite car, home and contents policies under the RAC brand in Western Australia. ACCC Chair Gina Cass-Gottlieb said other insurers’ constraints "would be unlikely to be sufficient to address the loss of competition."
The proposed deal includes the purchase of RAC’s insurance underwriting business for 1.35 billion Australian dollars, alongside a 20-year distribution agreement, according to Insurance News. RAC announced in May of the previous year that it intended to enter a general insurance partnership with IAG for the same term. Under the proposed arrangement, IAG would underwrite and manage the insurance business, while RAC would continue distributing policies under its brand. RAC said local branches, claims teams and contact centres would remain in place. RAC Group CEO Rob Slocombe explained that partnering with a national insurer "allows RAC to reduce the risks it carries alone."
After the blocking decision, IAG and RAC filed applications with the Australian Competition Tribunal to keep a review of the decision open, according to Insurance News. The same source reported that the tribunal review would be paused upon submission of the public benefit application, the process the regulator is now considering. RAC said the assessment allows the regulator to consider broader public benefits after its competition review. On 2 November, Insurance News reported that the regulator had extended the decision deadline by 15 business days after the parties submitted a remedies proposal. The revised deadline set 1 February 2027 as the decision date, making the undertakings part of the next stage of the case.
The undertakings disclosed by RAC include selling the renewal rights for NRMA home and car insurance policies in Western Australia, and making RAC home products available in the north of the state. They also include an investment of 20 million Australian dollars in resilience initiatives, according to Insurance News. RAC said the undertakings aim to address competition concerns and deliver additional benefits to Western Australians. The measures have been proposed after the regulator found the deal would weaken competition in the two insurance markets, while the impact of the undertakings on public benefit remains under review. The published assessment did not make a final finding that these benefits are sufficient to approve the deal.
The review of the deal predates the latest decision: in its insurance monitoring report issued in June 2026, the regulator said it had opposed the acquisition in December 2025 under the previous regime. After the new mandatory merger notification regime took effect on 1 January 2026, IAG re-notified the regulator of the deal on 3 March. The regulator then issued its Phase 2 decision in September, after which the separate public benefit review began. Against this dated economic backdrop, NAB’s October reading showed business confidence falling one point to -15 and business conditions declining one point to -2, while forward orders fell 11 points to -12. NAB said the drop in orders was broad-based and led by the construction and manufacturing sectors, while consumer confidence in the November reading fell 2.7% to 78.2 from 80.4 in October, its lowest level since late 2022; these economic indicators are not a stated reason for the regulator’s decision.