The merger of Aon and Willis Towers Watson has been thrown into doubt as the sale of the pair’s US health benefits businesses has proven “wholly insufficient” to allay the US Department of Justice’s (DoJ) concerns about the deal.
Yesterday, the DoJ filed a civil antitrust lawsuit blocking Aon’s $30bn proposed acquisition of Willis Towers Watson, which would bring together two of the big three global insurance brokers.
Aon and Willis Towers Watson responded sharply with a joint statement in which they said the DoJ’s action reflected a lack of understanding of their business, the clients they serve and the market in which they operate in.
The complaint, filed in the US District Court for the District of Columbia, alleges the merger threatens to eliminate competition, raise prices, and reduce innovation for American businesses, employers, and unions that rely on these services.
The DoJ further alleges that the newly merged company can offer global service, sophisticated data and analytics, and a breadth and depth of knowledge and expertise that other brokers do not offer.
The complaint alleges that Aon and Wills Towers Watson operate “in an oligopoly” and “will have even more [leverage] when [the] Willis deal is closed,” and could use their increased leverage to raise prices and reduce the quality of products relied on by thousands of American businesses — and their customers, employees, and retirees.
While the two firms have agreed to certain sales of businesses in connection with investigations by various international competition agencies, the DoJ alleges these proposed sales are inadequate to protect consumers in the US.
The complaint adds the sale of US-focused businesses in health benefits and commercial risk broking, in particular, are “wholly insufficient” to resolve the department’s “significant” concerns.
Attorney general Merrick Garland said the DoJ’s action demonstrated the department’s commitment to “stopping harmful consolidation and preserving competition that directly and indirectly benefits Americans across the country”.
“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,” he added.
“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.”
DoJ’s ‘lack of understanding’
For their part, the two firms issued a joint statement rejecting the department’s concerns and said they would continue to persue the deal.
“We disagree with the US Department of Justice’s action, which reflects a lack of understanding of our business, the clients we serve and the marketplaces in which we operate,” they said.
“Aon and Willis Towers Watson 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.”
The firms also thanked staff for their work supporting clients and each other throughout the process.