The U.K.'s Competition and Markets Authority has today cleared American
Express Global Business Travel's $570 million acquisition of CWT.
A statement issued by the CMA said: "The group has concluded that CWT is a significantly weaker competitor
than in the past and is likely to continue to weaken in the future and
that there are other suppliers who will offer customers an alternative
to the merged business."
It continued: "The group is therefore satisfied that the merger is not expected to
result in a substantial lessening of competition in the global market
for the supply of business travel agency services and has cleared the
deal."
Martin Coleman, chair of the independent panel of experts
conducting this investigation, said: "Having reviewed all the evidence
thoroughly over
the course of our investigation we have concluded, given the weaker
position CWT plays in the corporate travel market and the alternatives
available, that this deal should be allowed to proceed.
In a
summary of its final report released on Thursday, the CMA
cited CWT’s “continuing financial difficulties” and that “its financial
position is unlikely to improve and it potentially faces a trajectory of
continuing to lose more business than it will gain”.
It
continued: “Our bidding analysis has confirmed that BCD and GBT are the
two strongest competitors in the market, by far, and both are
substantially stronger than CWT.” In addition to “strong competition”
from BCD, CMA said Amex GBT currently faces “a material competitive
constraint from FCM and face an increasing constraint from CTM and Navan
as they continue to grow.”
In response to the CMA decision, Amex
GBT chief legal officer and global head of M&A Eric Bock
said the development “further reinforces our belief that the lawsuit
initiated by the U.S. Department of Justice is fundamentally flawed,
taking a narrow and outdated view of competition, and disregarding the
emergence of numerous significant competitors in business travel.
“We
stand by the benefits of combining with CWT and are confident in the
merits of our legal position. We are prepared to prove this in court if
required,” he said in a statement on Thursday.
The planned deal was first revealed in March last year, with the CMA announcing an investigation into the acquisition in June. In the summer, it identified competition concerns and said the merger could lead to customers paying higher prices, before escalating its investigation.
Amex GBT and CWT challenged the CMA's findings throughout its investigation, proposed remedies to allay its concerns, and criticised its processes and the "backward-looking" nature of its approach.
In January, the U.S. Department of Justice filed a lawsuit to block the merger
of the two TMCs, with a trial confirmed for September. In February, the
CMA issued an updated interim report in which reversed its initial
proposal to block the deal, pointing to CWT's weakening position and an
assessment of extensive TMC bidding data and business wins.