American Express Global Business Travel has pushed back the projected closing of its acquisition of CWT to early next year as U.K. regulators plan a deeper probe of the deal's market impact.
The U.K. Competition and Markets Authority on Tuesday announced it was referring the merger for a Phase 2 investigation as its initial investigation determined the merger of the two mega travel management companies—Amex GBT being the largest and CWT the third-largest operating in the U.K. market—could result in "a substantial lessening of competition." In a statement, CMA chief economic advisor Mike Walker said the Authority is "concerned the deal between two major suppliers of business travel agency services would reduce the pool of providers of these services to [global multinational] customers, which could lead to worse services and higher prices for [global multinational] customers."
In its decision, the CMA noted that global multinational customers have "distinct travel requirements" that only a handful of TMCs can meet, because of which the merger could result in a "significant lessening of competition." The decision was based on information provided to the CMA from Amex GBT and CWT as well as evidence it gathered through communication with the TMCs' customers, suppliers and competitors, according to the CMA.
The CMA also noted the merger is subject to a merger control investigation in the U.S.
Amex GBT and CWT now have one week to offer "undertakings" to address the Authority's concerns. If the CMA does not deem the response sufficient by Aug. 6, it will then refer the merger for a Phase 2 investigation, which are conducted by an independent panel of experts.
In light of that investigation, Amex GBT on Tuesday announced it now expects the acquisition to close in the first quarter of 2025, rather than the fourth quarter of 2024 per its initial announcement. The TMC said it would work with regulatory authorities to show the merger would "provide greater capacity for investment and innovation."
"We believe that a comprehensive Phase 2 analysis will demonstrate that the proposed transaction would result in many customer and supplier benefits, and that the business travel industry would remain highly competitive," Amex GBT chief legal officer and global head of mergers and acquisitions Eric Bock said in a statement. "In fact, as we’ve seen existing travel management companies grow and new tech-led companies enter the industry in recent years, we believe competition will continue to intensify."