American Express Global Business Travel blasted the U.S. Justice Department's antitrust lawsuit to block its acquisition of CWT as a "blatant politicized effort to bring one final anti-business merger challenge" in the final days of the Biden administration.
In its response filed on Tuesday to the DOJ's complaint filed last week, Amex GBT characterized the DOJ's findings "a rushed, apparently politically motivated complaint" given the acquisition was slated to close in March, at which time the Trump administration will be in charge. It also said the complaint "presents a completely inaccurate picture of the current industry using cherry-picked facts, isolated examples, and stale, out-of-context statements that do not reflect today’s competitive landscape."
Politics aside, here are some of the key allegations made by the DOJ in its complaint and Amex GBT's response to each. The $570 million acquisition also is facing a challenge from the U.K. Competition and Market Authority, with a final decision expected within the next two weeks.
The Global/Multinational Client Marketplace
DOJ's claim: Similar to the U.K. CMA's findings in its challenge to the acquisition, DOJ sees the field of TMCs able to compete for global and multinational customers as limited primarily to Amex GBT, CWT and BCD Travel, while other TMCs don't currently have the same scale to service such customers. "In the global and multinational segment, these demands on agent capacity are even more acute because many global and multinational customers require their own designated agents assigned only to their account," according to the complaint. "Even when it comes to acquisitions … other travel management companies have few options that would enable them to replicate the size and scale of Amex GBT, CWT, and BCD Travel."
Amex GBT's response: Amex GBT said DOJ's complaint "gerrymanders a contrived market" of global multinational companies without "showing that these customers receive unique products or services or even have similar purchasing patterns or demands." Additionally, it says that "several other TMCs" compete for large customers besides CWT and BCD, including FCM, Navan, Kayak for Business, Spotnana and Direct Travel, "most of which the Amex GBT bidding data show winning more bid value in actual new customer contracts from Amex GBT than does CWT," according to the response. "Independent survey data also show that at least six TMCs meet the requirements of large customers as frequently as CWT."
Technology Choice
DOJ's claim: The complaint said the elimination of the CWT product from the marketplace "would deprive customers of an important choice" and cited unnamed customers who had switched from Amex GBT to CWT and were unhappy about the acquisition. "If the transaction is consummated, Amex GBT expressly intends to eliminate the CWT technology and force customers to migrate to its own products, in what Amex GBT has described as a 'lift and shift onto the [Amex] GBT platform' and 'forced march to [Amex] GBT Tech Stack,' " according to the complaint.
Amex GBT's response: Amex GBT said that while it has invested heavily in its own platform, it would continue to support third-party technology to ensure customers still had a choice in technology solutions. "Amex GBT would plan to move CWT customers onto its own platform (i.e., infrastructure, telephony, cyber-security capabilities, etc.) for the purpose of benefitting those customers with Amex GBT’s extensive investments, while also continuing to give them a choice of tools as Amex GBT does today," according to the response. "In fact, 40 percent of Amex GBT’s transactions today occur through third-party technology, making it a critical channel and one all CWT customers would benefit from."
NDC Adoption
DOJ's claim: As an example of how the acquisition would "slow innovation," DOJ said Amex GBT has "repeatedly dragged its feet in adopting New Distribution Capability standards," compared with CWT, which has "supported the incorporation of NDC content" in part through its Spotnana partnership. As evidence, the complaint cited a June 2023 email by Amex GBT CEO Paul Abbott saying that Amex GBT "should 'do enough to appear progressive … but also use these pilots to highlight the gaps and block further activity until we have a scalable model.' "
Amex GBT's response: Amex GBT said it has made "extensive efforts" to drive NDC adoption, with an NDC program that now includes 16 countries and 20 airlines. "In fact, Amex GBT even fulfilled and surpassed American Airlines’ mandate for 30 percent of transactions to be from NDC by April 21, 2024, via its owned channels, reaching nearly 50 percent of American Airlines transactions via NDC," according to its response. "Amex GBT believes it is one of the few TMCs to hit this target at scale, demonstrating its commitment to NDC and innovation leadership in partnership with customers, supplier and technology partners." (American subsequently rescinded the mandate.)
Supplier Fees
DOJ's claim: The complaint said "airlines, hotels and other travel suppliers may suffer" from the acquisition in increased commissions and fees. "During negotiations, CWT’s owners estimated that the transaction would potentially allow Amex GBT to charge travel suppliers more than $100 million in increased commissions and fees, and they pressed Amex GBT to improve its offer for CWT to reflect those additional revenues," according to the complaint. DOJ added that Amex GBT had been successful in renegotiating higher fees following its acquisition of Egencia.
Amex GBT's response: Amex GBT said that estimate reflects "an ineffective negotiation tactic from CWT owners in negotiating the proposed transaction. In determining the valuation of CWT, Amex GBT never underwrote any supplier harmonization synergies." Amex GBT also denied the DOJ's findings regarding the higher fees from the Egencia acquisition.