The Commerce Commission has delayed its decision on whether Australian-owned Vero Insurance New Zealand will be allowed to buy NZX-listed rival Tower after raising some competition concerns about the proposed deal.
The antitrust regulator pushed out its deadline to July 26 after Suncorp Group-owned Vero asked for more time to respond to a letter from the commission outlining areas where the watchdog has some issues. The deal has already got the blessing of Tower's board after Vero raised its offer this week, and needs regulatory and shareholder approval to go ahead.
"The commission sent Vero a letter of unresolved issues on 16 June 2017 that outlined the areas it was continuing to investigate concerning competition issues in the provision of domestic house and contents insurance and private motor vehicle insurance," the regulator said in a statement. "Vero requested the extension to provide additional time to respond to the commission's letter, and for the commission to take into account recent developments on Vero's purchase offer."
The commission's statement of preliminary issues in March said the regulator would initially investigate whether the deal would substantially reduce competition in personal and commercial insurance markets and whether it would boost Suncorp's market power. The Australian insurer's New Zealand brands include general insurer Vero and life insurer Asteron Life, and the AA Insurance and AA Life joint ventures with the Automobile Association.
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The regulator didn't release the letter of unresolved issues, as it had with a proposed merger of Sky Network Television and Vodafone New Zealand which was ultimately rejected, and isn't seeking further submissions on the application.
Vero played down competition concerns raised by rivals in the application, saying Tower wasn't a particularly aggressive company in the insurance market, and that the enlarged insurer would still lag behind the Insurance Australia Group's leading market share.
Tower last traded at $1.32, below the $1.40 price Vero is willing to pay.