[ad_1]
WASHINGTON — The Justice Department on Wednesday filed an antitrust lawsuit challenging insurance broker Aon PLC’s proposed $35 billion takeover of rival Willis Towers Watson PLC, alleging the link would drive up prices and reduce innovation for U.S. companies, employers and the unions on which their services depend.
The department, which filed the case in Washington federal court, said the merger would eliminate competition in many different markets that are of value to the US economy.
The lawsuit marks the first major antitrust action by the Justice Department during the Biden administration, although it has been investigating the deal for more than a year.
“American businesses and consumers are counting on competition between Aon and Willis Towers Watson to lower prices for important services, such as health and retirement benefit advice,” said Attorney General Merrick Garland. “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.”
A spokesperson for Willis Towers declined to comment. A spokesman for Aon said the company had no immediate comment.
The Aon-Willis Group will create a giant insurance brokerage with more than $20 billion in revenue; Willis Tower in Chicago, where he rents Willis Towers Watson. Photo: Taylor Glascock/Bloomberg News
Aon and Willis Towers, both registered in Ireland, are two of the world’s largest insurance brokerages by revenue, along with New York-based Marsh & McLennan Cos.
In March 2020, Aon and Willis Towers announced their agreement, which would create a giant with total annual revenue of more than $20 billion, compared to $17.2 billion from Marsh & McLennan. Brokerages help companies purchase insurance and advise them on risk management.
Aon is also a principal advisor to companies on health and other benefits packages for their employees.
Currently, Aon, Willis Towers and Marsh & McLennan have the global reach and product diversity to offer the one-stop-shop for brokerage services that many internationally operating companies rely on to purchase insurance.
Aon and Willis Towers aggressively sold assets in recent weeks to smaller competitors to create new and larger competitors, in an effort to allay regulatory concerns about competition in the United States, the European Union and Asia. Some analysts said regulators may view these deals as too small to make a meaningful difference in the ability of asset buyers to compete with Aon-Willis and Marsh & McLennan towers together globally.
Subscribe to newsletters
Risk and Compliance Journal
Our Morning Risk Report provides insights and news on governance, risk and compliance.
The Department of Justice argued in its lawsuit that the liquidation of companies is far less than is needed to address the damages caused by the merger.
Occupational Justice Department personnel were investigating the transaction and its potential impact, as is usual in merger cases. President Biden has not yet nominated a political official to lead the department’s antitrust division, but his work has continued steadily during the transition between departments.
Antitrust officials at the European Commission, the EU’s executive, have expressed concerns that the merger, if left unchecked, could limit customer choice and give the joint entity significant influence over the prices customers have to pay for financial protection against property damage. Losses, business tensions and cybercrime.
The European Commission is expected to make its decision on whether to approve the merger by August 3.
Failure to complete the transaction will jeopardize the financial benefits that the two companies expect to benefit from. Aon and Willis Towers said the acquisition will generate annual cost savings of $800 million and boost revenue by selling new products to help clients manage risks in areas including climate change and intellectual property.
In early June, Aon CEO Greg Case announced additional divestitures that the company said were intended to answer questions raised by the Department of Justice, and expressed confidence that the deal would be finalized. “These agreements add to our momentum to close our proposed group with Willis Towers Watson,” he said at the time.
While the timing of the deal’s closing remained uncertain, many Wall Street analysts considered the deal to be on the right track although it may require more selling related to antitrust concerns.
– Leslie Scissem contributed to this article.
Write to Brent Kendall at [email protected] and Ben Dummett at [email protected]
Copyright © 2020 Dow Jones & Company, Inc. all rights are save. 87990cbe856818d5eddac44c7b1cdeb8
.
[ad_2]
Picture Credit!