CMA Begins Review of Aviva's Proposed Acquisition of Direct Line

The UK's Competition and Markets Authority (CMA) announced it will assess Aviva's proposed acquisition of Direct Line to determine if the deal could lead to a substantial lessening of competition in the UK insurance markets. Initial analysis suggests a full antitrust investigation is unlikely as the merger may not significantly impact consumer exploitation, given Direct Line's relatively low profitability.

The acquisition would position the combined entity as the largest motor insurer in the UK, potentially surpassing Admiral, the current market leader. This consolidation could effectively double Aviva's market share in motor insurance. Direct Line operates under various brands including Churchill, Green Flag, Privilege, and Darwin Motor Insurance, offering a broad portfolio that includes car, home, travel, pet, life, and business insurance.

The CMA is inviting feedback on the merger until May 29 and plans to deliver an initial ruling by July 10. If the authority identifies competition concerns during this phase, Aviva and Direct Line will have the opportunity to propose remedies to address those issues before potentially triggering a more comprehensive investigation.

The deal is expected to finalize by mid-2025, ahead of the regulatory deadline of December 31, 2025. Both companies have not commented publicly on the CMA review, and their shares have remained mostly stable during the announcement period. The CMA's focus remains on maintaining competitive balance to protect consumers and ensure fair pricing within the UK's insurance sectors.

For industry stakeholders, this merger highlights increasing consolidation trends in the UK insurance market, emphasizing regulatory vigilance on competitive dynamics in key lines such as motor and home insurance. The CMA's ongoing review will be pivotal in setting precedents for future insurer mergers and acquisitions within the region.