US DoJ sues to block Aon/WTW merger

The US Department of Justice (DoJ) has filed a civil antitrust lawsuit to block Aon’s proposed $30bn (£21.5bn) acquisition of Willis Towers Watson (WTW).

The DoJ stated that the merger of two of the ‘big three’ global insurance brokers would create a broking “behemoth”, threaten to eliminate competition, raise prices and reduce innovation for American businesses, employers and unions that rely on these services.

These reasons for blocking the merger were presented in the complaint filed in the US District Court for the District of Columbia.

The deal was agreed between Aon and WTW in March 2020 and would create a combined equity value of around $80bn (£57.2bn).

However, the complaint warned that the merged firms could used "increased leverage" to raise prices and reduce the quality of products, and that it would eliminate "important competition" in five markets.

Although the DoJ acknowledged that the firms have agreed to certain divestures in connection with various investigations by international competition agencies, the complaint alleged that these remedies were "inadequate" to protect consumers in the US.

It also alleged that the divestures in the US health benefits and commercial risk broking were "wholly insufficient" to resolve the department's concerns.

“Today’s action demonstrates the Justice Department’s commitment to stopping harmful consolidation and preserving competition that directly and indirectly benefits Americans across the country,” said Attorney General, Merrick B. Garland.

“American companies and consumers rely on competition between Aon and Willis Towers Watson to lower prices for crucial services, such as health and retirement benefits consulting.

"Allowing Aon and Willis Towers Watson to merge would reduce that vital competition and leave American customers with fewer choices, higher prices, and lower quality services.”

In response, Aon and WTW issued a joint statement: "We disagree with the US DoJ's action, which reflects a lack of understanding of our business, the clients we serve and the marketplaces in which we operate.

"Aon and WTW operate across broad, competitive areas of the economy and our proposed combination will accelerate innovation on behalf of clients creating more choice in an already dynamic and competitive marketplace.

"While this proposed combination was not developed with the pandemic in mind, the impact of the pandemic underscores the need to address similar systemic risks including cyber threats, climate change and the growing health and wealth gap which our combined firm will more capably address.

"We continue to make material progress with other regulators around the world and remain fully committed to the benefits of our combination.

"We are grateful to our respective colleagues for the work they have done to support our respective clients and each other throughout this process, as evidenced by the excellent performance of Aon and WTW since the announcement of the proposed combination."

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