Reinsurance News

DoJ suit may prolong international decisions on Aon & WTW merger

21st June 2021 - Author: Luke Gallin

The decision by the U.S. Department of Justice (DoJ) to try to block the proposed combination of re/insurance brokers Aon and Willis Towers Watson (WTW), suggests that regulators in other jurisdictions are now likely to fall in behind the DoJ’s timeline, according to reports.

aon-willis-towers-watson-merger-antitrustLast week’s announcement from the U.S. regulator came as a “surprise” to Aon and WTW, leading the pair to emphasise their commitment to getting their $30 billion merger over the line.

The filing of a civil antitrust lawsuit by the DoJ followed reports suggesting that the European Commission (EC) was likely to approve the deal after the parties agreed to various divestments to satisfy competition concerns in Europe.

This includes a $3.57 billion agreement with Arthur J. Gallagher for the sale of Willis Re and other WTW assets. Soon after, Aon announced arrangements to divest U.S.-focused businesses in health benefits and commercial risk broking, a move designed explicitly to appease the DoJ.

In the eyes of the DoJ, Aon’s proposed remedies are inadequate to protect consumers in the U.S., while being “wholly insufficient to resolve the department’s significant concerns.”

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The result is litigation in the U.S., which, according to our sister site Artemis’ sources, could extend the transaction deadline for other jurisdictions as they wait and see how it plays out, and this includes the EC.

Currently, the EC is scheduled to give its verdict on August 3rd, but sources in Europe told Artemis that this deadline could now be pushed back further, with the EC likely to wait and see what happens in the U.S. and what remedies are required there before making its decision.

Elsewhere, Australian industry publisher Insurance News Pty Ltd. reported today that the Australian Competition and Consumer Commission (ACCC) is in contact with the DoJ on the transaction.

A spokesperson told the publication that, “The ACCC’s review is ongoing and while it is separate to the US DOJ’s consideration of the merger, we are closely following the case and liaising with the DOJ.”

The ACCC is expected to come to a proposed decision on the merger in due course. In New Zealand, the regulator is currently scheduled to come to a decision by July 2nd, while regulators in other jurisdictions will likely be exploring the transaction and keeping an eye on developments in the states.

As we’ve said previously, analysts feel that additional divestitures to satisfy concerns in the U.S. is a more likely outcome than the deal failing to happen.

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