The debate over the scheduling of key dates in the legal process continues in the build up to Aon and Willis Towers Watson’s (WTW) antitrust trial with the US Department of Justice (DoJ).
Late in June, after what we assume was a protracted period of negotiation, the US department of Justice filed a civil antitrust lawsuit that blocked the proposed $30 billion mega-merger of Aon with rival Willis Towers Watson on the grounds that it would create an insurance and reinsurance “broking behemoth” capable of eliminating competition and increasing prices.
As we’ve reported before, a federal judge then ruled out the possibility of this trial getting properly underway before November, and warned of further possible delays as a result of the COVID-19 related backlog.
But preliminaries continue and the build-up to the trial is maintaining its pace, however the two sides in the trial, the merger parties Aon and Willis Towers Watson versus the United States represented by the DoJ’s Antitrust Division, cannot agree in scheduling of key pieces of the trial preliminaries and a hearing tomorrow will see them attempt to come to some kind of agreement on this.
That hearing, on July 15th, is designed to resolve the remaining disputes about the dates of a proposed schedule and case management order.
In most cases the merger parties, Aon and WTW, want to speed things up, as they’d already said the November start date was an issue and are keen to accelerate things where they can.
But on one specific issue the parties propose a later date than the US government does, which is related to delivering evidence on any proposed remedy, so any additional package of divestments we assume.
There are four sticking points in total it seems, all date and timing related.
The first is on the timing for the production of investigative materials, which the defendants (Aon and WTW) are pushing for a quicker three day deadline on saying that the DoJ has had ample time already to investigate the merger and that they need urgent access to any investigation materials. The DoJ is sticking with its more standard five day deadline here.
The second is on the defendant’s special interrogatories, on which the DoJ proposes it would deliver any answers or objections no later than July 29th, but Aon and WTW are asking for “substantive responses” to be delivered by the 23rd.
Thirdly, on the deadline for the defendant’s to propose any additional settlement offers, so remedies or offers of divestment, here the DoJ calls for this by August 2nd, but Aon and WTW say they would need more time and propose a date of September 1st.
The DoJ says that a September 1st deadline here would “severely prejudice Plaintiff’s ability to present to the Court a full case on the merits.”
Adding that, “For any remedy proposal offered by Defendants, Plaintiff must be allowed time to conduct the necessary discovery on that proposal.”
So the US government is trying to push for the delivery of any additional remedy proposal by August 2nd so it has time to assess it and any potential buyer as well, to ensure it covers off all of the concerns in their initial antitrust complain.
However, Aon and WTW note that, “Defendants have entered into binding contractual agreements committing to divest the entirety of one party’s business in each of the three markets alleged in Counts Three, Four, and Five of the Complaint.”
Which they appear to believe should go a long way towards satisfying the DoJ’s concerns.
Aon and WTW note that they have offered to work “expeditiously towards a formal settlement agreement with respect to these counts, and potentially with respect to the other counts, to maximize judicial efficiency in this matter.”
Suggesting that further remedy offers or divestments are definitely not considered out of bounds.
However, Aon and WTW state that “But 18 days is simply not enough time, particularly given that Defendants are still waiting for the Division to provide a draft settlement agreement with respect to Counts Three through Five. There is no good reason to prioritize this effort over all the many other things the parties need to do to get ready for trial.”
They also note that the DoJ has had information on the already agreed divestiture packages “weeks and even months before the Complaint was filed.”
Saying that the DoJ “could have attempted to reach a resolution well before now.”
The defendant’s Aon and WTW further state, “The fact that the Division chose to include these counts in the Complaint – making them subject to the terms of the CMO – should not preclude Defendants from taking the time required to work through the process. Instead, it opted to include these already-resolved matters in the Complaint, and now wants the parties to focus on them instead of the two markets that remain in dispute. That makes no sense.”
As we reported earlier this week, analysts at KBW expect more divestitures will result from the DoJ’s trial process.
Finally, the last sticking point to be discussed on July 15th is related to witnesses and here the DoJ is trying to assert that non-party witnesses should be able to participate through deposition, rather than being required to appear live at the trial making the process more flexible, it seems.
Here, Aon and WTW strongly disagree, saying, “The Division wants both the sword of being able to subpoena potential witnesses outside this district, bringing such witnesses to trial over objection, and the shield of being able to claim that those same witnesses are “unavailable” under the Federal Rules should the Division prefer their deposition testimony over a live appearance. This proposal would allow the Division to use its nationwide subpoena powers selectively and tactically, and tellingly, over the course of several meet and confer discussions on the provision, the Division never articulated why they need their proposed language on “unavailability” of witnesses. The provision is unfair to Defendants and unnecessary to the Division’s ability to prosecute its case.”
Of course, this is still all just preliminary work to get the trial started and fairly typical of these kinds of cases.
But, in a case where it seems time is of the essence for the merger parties with the trial date proposed to take the timeline beyond the merger agreement outside date, we’d imagine parties will be motivated to find agreement as the preliminary process needs to move forwards and fast to stand any chance at all of the merger completing before the end of the year.