Suncorp has urged New Zealand’s Competition Commission to refuse IAG’s proposed acquisition of Lumley NZ.

It says the transaction represents a “tipping point” and could increase IAG’s market share to more than 60% in some areas.

“It will remove any remaining competitive balance in the market, give IAG substantially increased market power and substantially lessen competition in relevant insurance markets,” Suncorp says. “The commission should decline to grant clearance.”

The submission is one of eight put to the commission, which will make a decision on the deal by March 28.

Suncorp says allowing IAG to dominate New Zealand insurance “creates real risks to the effectiveness of these markets and therefore to the economy as a whole”.

It claims there is no apparent public benefit and the deal would be detrimental to consumers in the long term.

If the Australian part of the transaction proceeds without the New Zealand part, parent Wesfarmers “would still be very likely to seek a divestment of Lumley”.

This would result in a much more competitive market, Suncorp says.

New Zealand’s Motor Trade Association, which represents 4000 businesses, is also critical of the acquisition plan.

It says IAG NZ, “with its substantial market share”, could drive down the cost of collision repairs.

MultiSure, which specialises in heavy commercial motor insurance, says competition in its field would be “seriously compromised”.

IAG has told the commission the takeover would not substantially reduce competition.

It argues there are no significant barriers to entry or expansion in the insurance market and that banks have significant “countervailing power” in personal lines because they can sell insurance to their large customer bases.