European Commission approves Aon and WTW merger

The European Commission (EC) has approved Aon’s planned $30bn (£21.5bn) acquisition of Willis Towers Watson (WTW), conditional on compliance with divestment measures.

As reported by our sister publication, European Pensions, Aon will have to commence with divestment of central parts of WTW's business to the international brokerage company Arthur J. Gallagher to continue with the merger.

The EC said this would strengthen Gallagher’s capabilities in reinsurance and commercial risk brokerage and improve its footprint in the European Economic Area, making it “a credible alternative to the combined entity post-transaction”.

The decision follows an in-depth investigation from the EC, which was launched on 21 December 2020 and highlighted a number of concerns.

The first of these, and one which the EC has attempted to remedy through the divestment measures, was the reduction in competition for commercial risk brokerage services and reinsurance brokerage services.

It also raised concerns about competition for pension administration services in Germany, calling on the duo to find a “suitable purchaser” for Aon’s German retirement benefits consulting and pension administration businesses, as well as its investment solutions business based in the country.

A joint statement from Aon and WTW said: “This is a major step that demonstrates continued progress toward obtaining regulatory clearances for the proposed combination.

“Both firms operate across broad, competitive areas of the economy and believe this approval affirms that our proposed combination will accelerate innovation on behalf of clients, creating more choice in an already dynamic and competitive marketplace."

EC executive vice-president, Margrethe Vestager, said: “European companies rely on brokers to obtain best possible solutions to manage their commercial risk. Aon and Willis Towers Watson are leading players in the insurance and reinsurance brokerage markets.

“The remedy package accepted by the Commission ensures that European companies, including insurance companies and large multinational customers, will continue to have a good choice and good services when selecting a broker suitable for their needs.”

The two companies agreed to the merger deal in March 2020 but still face obstacles, with the US Department of Justice having filed a civil antitrust lawsuit to block the proposed transaction in June.

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