The U.S. Justice Department has filed a civil antitrust lawsuit in the U.S. District Court for the Southern District of New York to block American Express Global Business Travel from completing its proposed $570 million transaction to buy CWT. The suit alleges the transaction—which would be the fifth in a string of Amex GBT acquisitions since 2018, including those for Neo, Egencia and Ovation Travel—would harm competition for corporate travel management services for U.S. global and multinational businesses.
“This acquisition is the latest in a series of acquisitions by Amex GBT that will further consolidate an already consolidated market with only a handful of competitive options capable of serving customers with the most need for travel management services," DOJ Antitrust Division acting assistant attorney general Doha Mekki said in a statement. "American businesses will face the consequences, seeing higher prices, less innovation and fewer choices.”
In a statement provided to BTN, Amex GBT said it is "evaluating our next steps" and that it was "disappointed" with the DOJ's action, which it said was based on a "backward-looking view of the market."
"The complaint completely disregards the emergence of numerous significant competitors in the business travel management industry and takes an intensely narrow view of competition," according to Amex GBT's statement. "In addition, the DOJ’s focus on only the largest and most powerful customers headquartered in the U.S. that represent less than 3 percent of the global business travel market is unwarranted and unsupported by legal precedent."
Scrutiny of the Amex GBT-CWT deal has heightened in recent weeks, with a concentration on global and multinational businesses that, according to the U.K. Competition and Market Authority and now the U.S. DOJ, have precious few legitimate options in the market for managing multinational and global travel programs.
Amex GBT and CWT are the first- and third-largest business travel management companies in the world, according to BTN portfolio mate Travel Weekly, with BCD Travel sitting between the two in second place. DOJ alleges that these players comprise the handful of TMCs capable of serving large global corporations and that the combination of Amex GBT and CWT would leave "few other companies … [to] effectively provide travel management services to global and multinational companies located in the United States."
The complaint also alleges that Amex GBT was motivated to initiate the transaction to create "a respite from its recent customer losses to CWT," citing CEO communications that recognized that the valuation of the proposed deal should reflect the financial benefit of avoiding future client losses to CWT. It also cited CWT communications that specified how Amex GBT would enjoy post-merger reduction in "price pressure" by removing "a big competitor."
Any global multinational clients Amex GBT may have lost to CWT was not specified in the summary of the complaint published by the DOJ. In the complaint, the DOJ noted that the definition of global multinationals vary among TMCs but said that variance "would not materially change the assessment of the likely anticompetitive effects resulting from the proposed acquisition."
Amex GBT has taken issue with the regulatory methodologies taken by the U.K.’s Competition and Market Authority, for example, as being out of touch with market realities. The CMA in its separate investigation of the deal set the travel spend threshold for a global multinational travel program at $25 million annually.
Business Travel News has set that threshold as the top end of the small and midsize market, particularly in the United States. BTN's Corporate Travel 100 companies—the largest programs in the market as ranked by U.S.-originating travel spend only—spend at least twice that much annually for business travel. In the past two years, TMCs listed as primary travel management partners for CT100 companies have diversified, rather than consolidated. The CT100 portfolios of Amex GBT and CWT, according to that list, each have decreased, with Amex GBT's total falling from 33 in the 2023 listing to 29 last year, and CWT's total falling from 17 to 12 in the same time period, although BTN did not identify TMCs for every company on the list.
TMC players like FCM, Fox World Travel, Kayak for Business, Navan and Travel Leaders have been cited as primary partners for CT100 companies.
Amex GBT argued the same in its recently published response to the CMA's Phase 2 report. "The evidence shows clearly that many TMCs have all the capabilities required by all [global multinational companies] and are actually competing for [global multinationals]" of all sizes and profiles, including BCD, FCM, CTM, Navan, Spotnana/Direct Travel, Kayak for Business/Blockskye and many others," the TMC said in the response."
Amex GBT further argued that the negotiating clout of large corporate buyers will keep the market competitive.
"Larger [global multinationals] in particular have the in-house capabilities to sponsor and have actually sponsored new entry and expansion if and when their existing options do not stay competitive. This has occurred on numerous occasions, including with Unilever (Navan), PwC US (Kayak for Business / Blockskye), and Walmart (Spotnana),"Amex GBT said. "No competition concerns can arise when [global multinational] customers have so many credible options available to switch or threaten to switch to."
The DOJ in its complaint said those options are limited, with other TMCs lacking the global reach of the three megas and the technology platforms lacking the servicing element.
"Serving global and multinational customers requires significant scale in both technological and customer service capabilities that only a few travel management companies possess today," the DOJ said in the complaint. "Most travel management companies simply do not have the capacity or capabilities to meet those demands. It would take years for any existing competitors to grow to sufficient scale to serve global and multinational customers at the scale that CWT does today."
Amex GBT also has proposed remedies to the CMA, including price caps, divesting customers and opening CWT's travel partner network.
The DOJ's complaint comes in the final days of the Biden administration, and in less than two weeks will be turned over to the incoming Trump administration, which some believe will take a more hands-off approach to challenging mergers and acquisitions. The CMA, meanwhile, will issue its final decision by Jan. 26.