The Competition and Markets Association (CMA) has announced an additional investigation into the merger of two motorcycle companies.
The inquiry comes after Ardonagh announced in February 2020 that it had agreed a £26 million deal to acquire its competitor Bennetts.
The CMA said the deal would establish Ardonagh as “by far the largest supplier” in the market, at three times the size of its next largest competitor. Following its Phase 1 investigation, the 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.
It said 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”.
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.
He added: “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”