The US Department of Justice (DoJ) filed a civil lawsuit on 16 June 2021 against Aon to stop the $30bn (£21.3bn, €24.7bn) acquisition of Willis Towers Watson.
It said the transaction would bring together two of the ‘big three’ global insurance brokerage firms.
In its complaint, the DoJ alleges that the merger “threatens to eliminate competition, raise prices, and reduce innovation for American businesses, employers, and unions that rely on these important services”.
“[This] action demonstrates the Justice Department’s commitment to stopping harmful consolidation and preserving competition that directly and indirectly benefits Americans across the country,” said DoJ attorney general Merrick 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.”
The DoJ said that many American businesses rely on the two companies for essential guidance on health and retirement benefits and that the competition between the two helps keeping their costs down by managing complex and evolving risks.
But if the merger was to go ahead, it would eliminate “this important competition in five markets”, the department added, “resulting in higher costs to companies, consumers and decreased quality and innovation”.
‘Lack of understanding’
In a joint statement, Aon and Willis Towers Watson said: “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.
“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.”
This, however, is not the first time roadblocks have been placed in the way of the M&A deal between the two giants since its announcement in March 2020.
In February 2021, the Australian Competition & Consumer Commission expressed concerns on the impact the transaction will have on the country’s supply of services.
A few months prior, the European Commission also opened an investigation into the merger. It was expected to be completed by May 2021, but in February, the EC suspended the deadline.