The New Zealand (NZ) Commerce Commission has failed to reach a decision on whether to approve the merging of Aon and rival Willis Towers Watson (WTW) by its deadline of May 25th, so has extended the date a decision is due by to July 2nd.
New Zealand’s Commerce Commission had launched an enquiry into the merger of the two insurance and reinsurance broking giants, asking how it would affect local companies.
That consultation resulted in the publication of a statement of issues by the NZ Commission that raised some concerns of local companies, which the merger parties then responded to, explaining why they felt competition would not be affected by Aon’s acquisition of WTW.
Fast-forward a number of months and now we’re at a stage where divestments are being announced, starting with Aon announcing the sale of most of Willis Re and certain other WTW assets to Arthur J. Gallagher, and then Aon agreeing to sell its pensions consulting, pension insurance broking, pensions administration and investment consulting business in Germany to Lane Clark & Peacock LLP (LCP).
The level of competition in the New Zealand reinsurance broking marketplace had been one concern raised to the Commerce Commission there, so the sale of Willis Re to a rival should help to satisfy that.
But further concerns had been raised over commercial insurance or corporate broking in New Zealand and none of the divestments announced so far will help to remedy or placate those concerns, which are very region specific to NZ and also Australia it seems.
So the NZ Commerce Commission is not yet ready to approve the merger, hence the further delay to its decision due by date.
Recently, Taiwan’s Fair Trade Commission became the first authority (that we’d heard of) to give its approval to Aon’s acquisition of and merging with rival Willis Towers Watson (WTW), saying that it did not feel it would restrict competition in the marketplace.
It seems the NZ Commerce Commission is not yet ready to make such a statement, which likely means it is still in discussions with the merger parties and suggests there is still a chance some kind of remedy is required to get the approval in NZ.
That could read across to Australia as well, given the major brokers do share resources across Aus/NZ. It’s hard to say for sure though.
The new decision due date of July 2nd still comes in advance of when the EC has to deliver its final decision, but is yet another sign that the global approval of Aon’s acquisition of WTW won’t be received until Q3 2021.