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Aon / WTW merger needs further review, says Singapore

29th June 2021 - Author: Luke Gallin

After completing its initial review of the proposed combination of re/insurance brokers Aon and Willis Towers Watson (WTW), the Competition and Consumer Commission of Singapore (CCCS) has identified executive compensation and related consulting services as areas for further review.

Singapore skylineFollowing receipt of a notification from Aon for a decision on the proposed merger, the CCCS commenced a public consultation on the deal on April 9th, 2021.

Specifically, the CCCS explored whether the combination of Aon and WTW would infringe section 54 of the Competition Act (Cap. 50B), “which prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition within any market in Singapore.”

The CCCS notes that, back in April, Aon informed in relation to the supply of retirement benefits consulting services and human capital consulting services, two areas in which Aon and WTW overlap in supplying services.

“Based on information furnished by Aon and feedback from third parties, CCCS has identified areas for further review in respect of the Proposed Transaction, pertaining to executive compensation and related consulting services, as a sub-segment under human capital consulting services,” explains the CCCS.

Ultimately, feedback from third parties suggested to the CCCS that once merged, the new entity will be the largest provider of executive compensation and related consulting services in Singapore, with limited alternative providers available to compete effectively.

Additionally, feedback highlighted potential barriers to entry and expansion, with limited consulting personnel who have the expertise required and the experience in providing executive compensation and related consulting services in the region.

Finally, feedback also implied that establishing a database of compensation data, which supports the provision of executive compensation and related consulting services in Singapore, could also be seen as a barrier to entry.

“In view of the above feedback received, CCCS needs to further review the competition effects of the Proposed Transaction in greater detail,” says the CCCS.

The CCCS states that at this time, Aon and WTW may offer commitments to address the potential competition concerns that might arise from the proposed merger, or the deal will proceed to a detailed further review once the CCCS receives relevant documents from Aon. During this review, commitments may be offered at any time, says the CCCS.

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