ACCC allows proposal to improve towing services for IAG policy holders

18 December 2003

The Australian Competition and Consumer Commission has decided not to overturn immunity* for a preferred towing operator scheme in which IAG policyholders will receive certain additional services on condition that they use a preferred towing operator following a motor vehicle accident.

The Preferred Accident Towing Operator (PATO) scheme was designed by the IAG Insurers** to improve towing service quality to policyholders, particularly in areas where there is little or no regulation relating to the towing industry.

The IAG Insurers have advised that in states and territories where there is existing legislation or regulations relating to the towing industry, the PATO scheme will be implemented so as to work within the requirements of each jurisdiction.

"The ACCC considers the PATO program is likely to result in improvements in service, safety, and presentation standards, especially in states and territories in which the towing industry is not currently regulated", ACCC Deputy Chair, Ms Louise Sylvan, said today. "It also has the potential to reduce costs for the IAG Insurers, which may lead to lower insurance premiums for consumers.

"The ACCC, however, intends to seek further submissions from interested parties and initiate a review of the notifications in 12 months and has asked the IAG Insurers to keep records of any complaints in relation to the scheme".

The ACCC found that there may be some detrimental impact on customer choice and thereby competition, for smash repair services.  However, this impact is reduced as policyholders will not be required to use a particular tow truck operator and the notified conduct does not include recommending or discussing smash repairers with policyholders.

The ACCC also considered that the anti-competitive impact of the scheme on non-PATOs will be diminished by several features, including that the scheme will primarily affect only accident towing and will operate within the current legislation and regulations in each state and territory. Also, non-PATOs will still be able to provide towing services for other insurance companies and IAG policyholders will be able to have their vehicles towed by non-PATOs if they choose to do so.

Overall, the ACCC decided that the arrangements are likely to provide benefits to the public that would outweigh any potential detriment.

* The IAG Insurers lodged notifications with the ACCC in August and September 2003.  Notification provides immunity from legal action by the ACCC and any other party for potential breaches of the exclusive dealing provisions of the Trade Practices Act 1974.  Third line forcing conduct involves the supply of goods or services on condition that the purchaser acquires a second good or service from another supplier.

** The IAG Insurers are Insurance Manufacturers of Australia Proprietary Limited, Insurance Australia Limited (formerly NRMA Insurance Limited), SGIO Insurance Limited, SGIC General Insurance Limited, CGU Insurance Limited, NZI Insurance Australia Limited and CGU – VACC Insurance Limited.

Release number: 
MR 276/03
ACCC Infocentre: 

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