The U.S. Department of Justice has filed a civil antitrust lawsuit to block a merger than it says “threatens to eliminate competition, raise prices, and reduce innovation for American businesses, employers, and unions that rely on these important services.”
The merger in question is Aon’s $30 billion proposed acquisition of Willis Towers Watson, announced in March 2020. Earlier this month, and citing regulatory considerations related to the pending merger with Willis Towers Watson, Aon announced plans to sell off its U.S. retirement business and retiree health exchange platform—its U.S. retirement business to Aquiline—which acquired Ascensus in 2015 and recently made a capital investment in SageView Advisory Group—and its Aon Retiree Health Exchange™ business to Alight for total gross consideration of $1.4 billion.
However, according to a June 16 DOJ press release, “Although Aon and Willis Towers Watson have agreed to certain divestitures in connection with investigations by various international competition agencies, the complaint alleges these proposed remedies are inadequate to protect consumers in the United States.” The complaint also alleges the U.S.-focused divestitures in health benefits and commercial risk broking, in particular, are “wholly insufficient” to resolve the department’s significant concerns.
The DOJ goes on to explain, “Aon and Willis Towers Watson provide essential guidance to many of America’s largest companies. American companies depend on them to craft and administer health and retirement benefits, and to keep their costs down by managing complex and evolving risks. They compete head to head to provide these services, which helps ensure businesses obtain innovative, high-quality broking services to manage their risks and provide critical health and retirement benefits to their employees at a reasonable cost. As the complaint alleges, the merger would eliminate this important competition in five markets, resulting in higher costs to companies, higher costs to consumers, and decreased quality and innovation.”
“Today’s action demonstrates the Justice Department’s commitment to stopping harmful consolidation and preserving competition that directly and indirectly benefits Americans across the country,” said Attorney General Merrick B. Garland. “American companies and consumers rely on competition between Aon and Willis Towers Watson to lower prices for crucial services, such as health and retirement benefits consulting. Allowing Aon and Willis Towers Watson to merge would reduce that vital competition and leave American customers with fewer choices, higher prices, and lower quality services.”
In response, Aon stated: “We disagree with the U.S. Department of Justice’s action, which reflects a lack of understanding of our business, the clients we serve and the marketplaces in which we operate. Aon and Willis Towers Watson operate across broad, competitive areas of the economy and our proposed combination will accelerate innovation on behalf of clients creating more choice in an already dynamic and competitive marketplace. While this proposed combination was not developed with the pandemic in mind, the impact of the pandemic underscores the need to address similar systemic risks including cyber threats, climate change and the growing health and wealth gap which our combined firm will more capably address.
“We continue to make material progress with other regulators around the world and remain fully committed to the benefits of our combination.”
