The Australian Competition and Consumer Commission (ACCC) has opposed Insurance Australia Group's (ASX: IAG) proposed acquisition of RAC Insurance from the Royal Automobile Club, according to a Thursday statement by the Commission.

The commission said the deal is likely to substantially lessen competition in the supply of Western Australia's motor and home insurance markets.

It said the alternative insures would not be able to prevent the significant loss of competition rising from the proposed acquisition.

Without the deal, RAC Insurance would be able to continue competing effectively in Western Australia, the Commission added.

In a separate Thursday filing, IAG said it intends to lodge an application with the Commission for assessment of the proposed acquisition under the new mandatory merger control regime.