The US Department of Justice (or DoJ) filed a civil action against two major US groups on Wednesday 16 June. Its objective was to prevent the completion of the Aon Group's proposal. The latter wants to acquire the Irish broker Willis Towers Watson (WTW) for 30 billion dollars.
The DoJ's complaint was filed in federal court in the District of Columbia. It opposes any merger between the two major partners. According to the Department, such a merger would pose a threat to American businesses, employers and unions.
The union of the two companies will lead to an end to competition, higher costs and reduced innovation within the companies. Attorney General Merrick B. Garland (Merrick B. Garland) said the action is proof that the Justice Department is committed to ending harmful mergers.
His vision is to maintain competition that directly and indirectly benefits Americans across the country. For the attorney general, American businesses and consumers benefit from the competition between Aon and Willis Towers Watson in the form of lower prices for basic services. This is the case with health and retirement advice offerings, a custom that the new proposal will break.
By allowing Aon and Willis Towers Watson to merge, there will be a considerable reduction in the vital competition between them. U.S. clients will also benefit from fewer choices, higher prices and lower quality of service. The merger between Aon and Willis Towers Watson was announced in March last year.
If successful, it will merge two of the three members of the "Big Three" insurance brokers, the third of which is Marsh & McLennan. The latter is the largest of the three, with revenues of US$17.22 billion in 2020.
As stated in the complaint, the two groups act in an "oligopoly" and will have greater influence after the conclusion of the agreement. In addition, Aon and WTW have agreed to cancel their investments in order to comply with antitrust standards. But the U.S. Department of Justice says their actions are insufficient.
Out of breath, the defendants issued a joint statement regretting the complaint. In their view, the action taken against their project reflects a lack of understanding of their business, their clients and their markets.
As justification, they argue that Aon and Willis Towers Watson operate in a highly competitive economy. Through their proposed merger, innovation will be accelerated on behalf of their clients. The two brokers explained that they will create more choice in an already dynamic and competitive market.
"While this integrated project has not been developed with a pandemic perspective, its impact demonstrates how critical it is to be able to withstand similar systemic risks. These include cyber threats, climate change and the growing gap between health and wealth," they added.