26 July 2017
Release no. 12
Commission declines Vero Insurance clearance to acquire Tower
The Commerce Commission has declined to grant clearance to Vero Insurance New Zealand Limited to acquire up to 100% of
the shares in Tower Limited.
The merger proposed bringing together the second and third largest insurers for domestic house, contents and private
motor vehicle insurance in New Zealand leaving only two substantial competitors in the market post-merger.
Chairman Dr Mark Berry said that the Commission was not satisfied that the merger would not have the effect of
substantially lessening competition in the personal insurance market.
“The merger would remove Tower as the only independent competitor to Vero and IAG with the scale, brand strength and
experience to compete effectively across the breadth of personal insurance markets. While there are other smaller
competitors in personal insurance, we do not consider that they replicate the level of constraint that Tower imposes.
Without the competition that Tower provides, there is a real risk that consumers would end up paying higher prices for
insurance cover while receiving lower quality, such as reduced insurance coverage,” Dr Berry said.
“Relevant to this competitive landscape, Tower is making concerted efforts to reposition itself in the market and
improve its performance. There is also a real chance that Tower would be purchased by a third party further enhancing
Tower’s significance as an independent competitor in the market.”
A copy of the Commission’s decision will be available on the Clearances Register within the next week.
Background
Vero
Vero is a New Zealand subsidiary of Suncorp Group Limited, an Australian-based finance, insurance, superannuation and
banking business. Suncorp, through Vero and AA Insurance, provides a range of personal and commercial insurance products
direct to customers and through insurance brokers and banks (ANZ, AMP and Warehouse Money).
Tower
Tower is a New Zealand based insurance company listed on the New Zealand and Australian stock exchanges. It offers
insurance direct to consumers and through Kiwibank, TSB and Trade Me.
IAG
IAG is a wholly-owned subsidiary of Insurance Group Limited listed on the Australian Stock Exchange. It provides
personal and commercial insurance products direct to consumers under the State and AMI brands, and through BNZ, Westpac
and via brokers under NZI and Lumley.
ends