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DoJ’s Feb 2022 trial date ‘untenable’ and prolongs uncertainty, says Aon/WTW

30th June 2021 - Author: Luke Gallin

Lawyers of global re/insurance brokers Aon and Willis Towers Watson (WTW) have described the US Department of Justice’s (DoJ) proposal that its trial seeking to block their merger not commence until February of next year as “untenable”.

aon-willis-towers-watson-merger-antitrustIn an effort to stop the creation of what it calls a “broking behemoth”, the DoJ filed a civil antitrust lawsuit last month to block the proposed $30 billion combination of Aon and WTW.

According to court documents, the DoJ has proposed that trial not commence until February 28th, 2022, which is six months after the Outside Date of September 9th, 2021, set out in the defendants’ March 2020 Business Combination Agreement, and two years after the merger was announced.

“That is untenable to Defendants,” argue lawyers. Adding that, “The possibility that a $30 billion transaction might fail due to unnecessary delays on the part of the Plaintiff should be unacceptable to all.”

The court document goes on to claim that the antitrust division of the DoJ is “resisting an early trial date” and in the meet and confer process refused to comment on what is the earliest trial date it would accept.

RMS

Both Aon and WTW are eager to move forward with the transaction and lawyers stress that each day the deal remains pending, they are losing “top talent” while their clients are faced with uncertainty as they consider which company to use.

“Eight more months of uncertainty—as would be required under the Division’s proposed trial schedule—are unsustainable,” says the document.

Interestingly, lawyers highlight prior cases in the U.S. where government merger challenges have been scheduled for trial as quickly as two and half months, and argue that this case should be no different.

Since the DoJ started its investigation into the proposed mega-merger, lawyers note that Aon and WTW have provided “millions of documents and substantial volumes of data, made numerous employees available for depositions, and responded to countless questions and requests.”

Aon and WTW have either proposed or agreed some significant divestments in order to satisfy competition concerns around the world, including the sale of Willis Re and other WTW assets to Arthur J. Gallagher.

Among the key issues for the DoJ is that the merger could lessen competition for large customers, a theory which lawyers say courts have rejected before.

“Plaintiff will not be able to meet its burden to show that this transaction is anticompetitive. Indeed, this transaction will enhance competition by enabling the merged company to innovate better and help clients to mitigate risks that are presently underinsured or uninsurable, and generate significant annual cost savings,” says the court document.

The document concludes that Aon and WTW “request that the Court enter an Order setting trial to begin on August 23rd, 2021, or as soon thereafter as the Court can accommodate.”

Lawyers argue that this date is reasonable in light of circumstances and that it does not deny the DoJ sufficient time to prepare its case.

“The 18 months from the signing of the transaction to the Outside Date in this transaction provided the Division with more than enough time to both investigate and litigate. Indeed, Plaintiff has spent more than 14 months investigating the transaction, and Defendants have repeatedly accommodated Plaintiff’s requests for more time to investigate than what is afforded to Plaintiff under the Hart-Scott-Rodino Act.”

Yesterday, the Competition and Consumer Commission of Singapore (CCCS) provided an update on its investigation into the merger, revealing that it identified executive compensation and related consulting services as areas for further review.

While in South Africa, the regulator has called on the insurance and reinsurance brokers to make a number of divestments to remedy competition concerns before their merger can be approved in the country.

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