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Aviva’s planned takeover of Direct Line is to be reviewed by the UK’s competition watchdog, potentially setting back a \u00a33.7bn deal.<\/p>\n
The two insurance firms agreed a major deal in December last year, but the Competition Markets Authority (CMA) said it was investigating whether a merger would result in a “substantial lessening” of competition in the insurance sector.<\/p>\n
The combined companies would make become a significant force in the car insurance sector, which has caught the attention of the CMA.<\/p>\n
The watchdog will report its findings of the probe in July.<\/p>\n<\/div>\n
If the Aviva and Direct Line deal goes ahead, it would boost its dominance in the insurance market against rivals such as Legal & General and Prudential.<\/p>\n
Aviva shareholders would own about 87.5% of the new company while Direct Line shareholders would own about 12.5%.<\/p>\n
The combined company would result in an insurer with more than 20% of the share of home and motor insurance in the UK.<\/p>\n
Direct Line owns the Churchill and Green Flag brands, as well as its namesake brand as part of a portfolio offering car, pet, home and other insurance policies.<\/p>\n
In December, experts at JP Morgan said they did not expect any competition concerns from regulators.<\/p>\n
But the CMA said the creation of a single firm “may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services”.<\/p>\n
The BBC has contacted Aviva for comment.<\/p>\n
Any interested parties have been asked to provide feedback to the CMA by 29 May.<\/p>\n
This means individuals or companies who have a vested interest in the outcome of the deal as they may be impacted can have their say.<\/p>\n<\/div>\n