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New Zealand : NEW ZEALAND COMMERCE COMMISSION grants approval to IAG to acquire Wesfarmers insurance business
Publish Date : 08-May-2014
The New Zealand Commerce Commission has given a green signal to a proposal by the IAG (NZ) Holdings to acquire Lumley General Insurance (NZ) from Wesfarmers.
IAG had signed an agreement in December 2013 to acquire Wesfarmers' Australian and New Zealand underwriting operations for $1.85bn, subject to regulatory approvals in both countries. The deal included Wesfarmers' underwriting companies trading under the WFI and Lumley Insurance brands, and a ten-year distribution agreement with Coles. This acquisition would likely boost IAG's footprint in Australia and New Zealand.
The acquisition is pending approvals from the Reserve Bank of New Zealand, the Australian Prudential Regulation Authority and the Australian Treasurer.
According to the New Zealand corporate regulator, it was a good news that the proposed acquisition will not have, or would not be likely to have, the effect of substantially lessening competition, for personal and commercial insurance products.
Commerce Commission chairman Dr Mark Berry stated that still IAG will need to compete with other insurers on price and quality.
Berry adds, "By their nature all mergers create a larger company with a greater market share. However, that does not mean that a substantial lessening of competition in the market naturally follows. In this case the Commission is satisfied competition remains."
"We have considered submissions from a number of interested parties and we are confident that IAG's purchase of Lumley will not materially change the provision of services or the ability of customers to shop around as other companies will be able to expand to replace Lumley's position."
