The U.S. Department of Justice (DOJ) has filed a civil antitrust lawsuit in an attempt to block American Express Global Business Travel’s $570 million acquisition of rival company CWT.
The deal was announced in Marchwhich will mark Amex GBT’s fifth acquisition of a travel management company since 2018, including its Acquisition of HRG in 2018 and 2021 Acquisition of Egencia. The U.S. Department of Justice believes that this latest transaction will harm competition in the U.S. and global business travel management fields.
“U.S. businesses rely on travel management companies to connect employees, control travel costs, streamline travel booking and expense management, and ensure employee safety while traveling,” said Doha Meki, Acting Assistant Attorney General of the Department of Justice’s Antitrust Division. Doha Mekki) said.
“This acquisition is the latest in a series of acquisitions by Amex GBT that will further consolidate an already consolidated market with only a few competitive options to serve customers who need travel management services most. U.S. businesses will face The consequences are seeing higher prices, less innovation and less choice.”
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The DOJ complaint alleges that Amex GBT’s senior executives viewed the deal as a “consolidation” opportunity and that the company also viewed it as a way to theoretically avoid potential future losses from CWT, noting that during the negotiations CWT had stated Amex GBT should pay more as it will benefit from potentially reduced ‘price pressure’ post-merger [a] Big competitor. “
Amex GBT said in a statement that it was disappointed with the legal proceedings, adding that it refuted suggestions that the deal would harm large customers and believed the deal would benefit all customers, employees and suppliers.
American Express GBT said: “The DOJ complaint does not take into account where the business travel industry is today, but instead looks back at the market and fails to recognize that the travel industry has shifted dramatically since the pandemic began. “Accordingly, the complaint Presents a distorted view of the market and attempts to support that view with factually incorrect statements and snippets taken out of context.”
The company argued that the complaint did not take into account other competitors that have emerged in the space in recent years.
Amex GBT said: “The Department of Justice’s focus only on the largest and most powerful customers headquartered in the United States, which account for less than 3% of the global business travel market, is unwarranted and unsupported by legal precedent.”
When Amex GBT announced the proposed acquisition, CEO Paul Abbott said the deal, expected to close by the end of 2024, would represent significant opportunities for the company.
“We will welcome 4,000 new customers to our proven Amex GBT software and service model, creating more choice for our customers and more opportunities for our employees,” said Abbott.
The Justice Department is not the only party expressing concerns.
In June, the UK Competition and Markets Authority (CMA) An investigation into the transaction was launched. In response to the news, Amex GBT stated that it had “voluntarily notified the transaction to the CMA to obtain UK antitrust approval.”
soon after in In July, the CMA announced it was conducting a closer review. exist In August, the State Administration for Market Regulation transferred the case for in-depth investigation and published Latest updates on online surveys. For example, the CMA said in November that it had “temporarily” identified competition concerns related to the takeover. The page was last updated on Friday with the note “joint response from both parties to the published interim report.”
