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The US government has demanded to block the takeover of Aon by Willis Towers Watson, threatening a $ 30 billion offer destined to create the world’s largest insurance broker.
The Justice Department said Wednesday in a complaint that the combination “would eliminate substantial face-to-face competition and likely lead to higher prices and less innovation, harming U.S. companies and their customers, employees and retirees.”
Together with Marsh McLennan, Aon and Willis form a trio that “dominates the competition for insurance brokerage from the largest companies in the United States, almost all of which are customers of at least one of them,” the DoJ said.
The big three have features that smaller brokers can’t replicate, such as comprehensive service, better data and analytics, and a “different sales approach” for risk managers in large companies that bought insurance, the DoJ said. As for the health benefits, they were able to design custom products for large multinational customers.
The combination “would turn the three grains back into two grains,” and the Aon-Willis unit “would use this leverage against U.S. companies,” according to the complaint.
Shares of the companies fell in the afternoon in New York, with Aon up 3% and Willis up 7%.
The worldwide acquisition faces regulatory investigations in several jurisdictions, most notably the US and the EU. In commercial insurance correction, Aon and Willis have a combined share of at least 40% in some critical insurance markets, such as property damage, liability and financial risk.
The DoJ complaint cites an Aon chief agent who reportedly told colleagues that the company has “more leverage than we think it will have and will have even more when [the] Willis’s deal is closed. . . We operate in an oligopoly that not everyone understands. “
“Today’s action demonstrates the Justice Department’s commitment to halting harmful consolidation and preserving competition that directly and indirectly benefits Americans across the country,” U.S. Attorney General Merrick Garland said in a statement.
The expected end date of the agreement has already fallen from the first half of 2021 to the third quarter, as regulatory processes have been dragging on.
Last month, Aon and Willis agreed to download $ 3.6 billion asset value, including Willis Re, for rival agent Gallagher, in an attempt to mitigate European competition regulators.
Aon said the agreement addresses issues raised by the European Commission “and seeks to address certain issues raised by regulators in certain other jurisdictions.”
Aon also agreed earlier this month to sell its U.S. retirement business to New York-based Aquiline Capital Partners and its operation of Aon Retiree Health Exchange to Alight, an agreement Aon said it had “The intention to address certain issues raised by the United States Department of Justice.”
The Justice Department said in the complaint that the proposed divestments were not enough to resolve its concerns. In terms of correcting real estate, financial, and casualty risks for large U.S. corporate corporations and health benefits, the resources proposed by the groups “would not come close to fully maintaining competition than any other. would be lost as a result of the proposed merger “.
Aon did not immediately respond to a request for comment. Willis Towers Watson declined to comment.
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