The Motor Trade Association of MTA SA/NT described the move as a “dark day” for South Australians while the Motor Trades Association of Australia said broader, ongoing insurance company consolidation weakens outcomes for consumers and small businesses.

However, according to the ACCC, the proposed South Australian transaction is unlikely to substantially lessen competition as other suppliers in the market will continue to compete with and constrain a merged Allianz and RAAI.

While RAAI has a strong brand reputation associated with its motoring club and membership offering, the commission found that competition in relation to price and coverage in South Australia is mainly provided by other insurers including Suncorp through its AAMI brand, IAG, Auto & General (Budget Direct) and Youi.

“As well as being the two largest insurers in Australia, Suncorp and IAG also have a significant presence in South Australia. As such, both are likely to compete effectively against Allianz in South Australia even after it has purchased RAAI,” said Dr Philip Williams, ACCC Commissioner. “Mid-tier insurers Auto & General and Youi are also growing their market share nationally and will continue to compete on price in South Australia.”

Additionally, the ACCC investigation found evidence that the RAAI faces “specific challenges”, meaning that it is likely to be less competitive than it has been in recent years.

The ACCC said it also considered the impact of the proposed deal on collision repair services along with windscreen repair and replacement services in South Australia.

Despite the ACCC’s findings, the MTA SA/NT expressed “deep disappointment” in the commission’s decision, with CEO Darrell Jacobs saying that South Australian motorists have awoken to a less competitive insurance sector entirely run by corporate giants.

“This is a dark day for South Australian motorists and small businesses, with local member motor-club insurance on death’s door. Allianz is using South Australian trust in the RAA brand while pulling the wool over their eyes. With this decision, South Australian motorists will get stung,” said Jacobs, who added that “RAA Insurance is now as local as lederhosen”.

Saying the decision concentrates the South Australian motor insurance market into the hands of a few multinational and publicly listed insurers, Jacobs said the combined market share of RAA Insurance and Allianz would have long term negative outcomes for consumers.

Rod Camm, interim CEO of the MTAA, also said the fast-moving consolidation of Australia’s insurance sector presents serious consequences for choice, pricing and accountability.

“Less competition means fewer options for consumers and increasing pressure on local repairers,” he said.

The ACCC’s Allianz-RAAI decision follows its approval of the acquisition of RACQ’s insurance arm by IAG in Queensland and comes ahead of its consideration of IAG’s proposed acquisition of Western Australia’s RAC Insurance.

Expressing serious concern over the various proposed acquisitions, the MTAA renewed its call for urgent reforms to the Motor Vehicle Insurance and Repair Industry Code of Conduct.

“This was a chance to put stronger protections in place. Instead, we are seeing decisions that reinforce market dominance,” said Camm. “It is essential the Australian Government steps in to protect the long-term interests of motorists and independent repairers.”