Investment - Articles - Motorcycle insurance merger raises competition concerns


The CMA has found that Ardonagh’s completed purchase of Bennetts could lead to higher prices, less choice and worse services for motorcyclists in the UK.

 Ardonagh Group Limited (Ardonagh), which operates the Carole Nash and Swinton brands, and Bennetts Motorcycling Services Limited (Bennetts) are the 2 leading distributors of motorcycle insurance to private customers in the UK.

 Ardonagh announced in February 2020 that it had agreed a £26 million deal to acquire Bennetts. The deal would establish Ardonagh as by far the largest supplier in the market, at 3 times the size of its next largest competitor.

 Following its Phase 1 investigation, the Competition and Markets Authority (CMA) found that Ardonagh and Bennetts compete closely at present. The CMA also found that the merged company would face only limited competition from other much smaller suppliers, such as Bikesure, MCE and Hastings, as well as a range of other smaller brokers.

 While the increased use of price comparison websites (PCWs) has had a positive impact on competition in recent years, the CMA found that Ardonagh and Bennetts hold a significant incumbency advantage in the market. The 2 businesses are less exposed to price competition on PCWs than other suppliers as they make more of their sales directly to customers or through renewals.

 Using evidence of recent market trends, the CMA found that the increased use of PCWs has not materially affected the 2 businesses’ market-leading positions in the UK in recent years or helped any smaller players to grow significantly over this period.

 Colin Raftery, CMA Senior Director, said: “Over one million motorcyclists in the UK rely on good value and high-quality insurance to keep them on the road and to provide an effective safety net when things go wrong.

 “We’re concerned that Ardonagh buying up its most important competitor could lead to a lack of competition in the market, resulting in a worse deal for customers across the UK when they next come to renew their policies.”

 Ardonagh and Bennetts now have 5 working days to offer any undertakings to address the CMA’s concerns. If they do not do so, the merger will be referred for an in-depth Phase 2 investigation.

 For more information, please visit the Ardonagh/Bennetts merger inquiry case page.
  

Back to Index


Similar News to this Story

The Autumn Budget will inevitably bring higher taxes
Oliver Faizallah, Head of Fixed Income Research at Charles Stanley, part of Raymond James Wealth Management, comments: “Markets are concerned about th
US shutdown knocks equities off course
Asian stocks are down along with US and European futures as US fails to avoid shutdown. Gold hits another all-time high as investors seek out safe hav
Celebrity splits shows need for financial advice in divorce
The separation of an Oscar-winning actress and Grammy-winning musician sparks questions for divorce and finances. While high-profile splits often domi

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.