American Express GBT is evaluating its next steps following a decision by the US Justice Department (DoJ) to file a civil antitrust lawsuit to stop it acquiring CWT.
In a hard-hitting response to the lawsuit, Amex GBT accused the DoJ of presenting a “backward-looking” and “distorted” view of the market and said it had failed to recognised how the industry has changed dramatically since the pandemic.
“The complaint completely disregards the emergence of numerous significant competitors in the business travel management industry and takes an intensely narrow view of competition,” said Amex GBT in a statement.
“In addition, the DoJ’s focus on only the largest and most powerful customers headquartered in the US that represent less than three percent of the global business travel market is unwarranted and unsupported by legal precedent.”
It also hit out at the timing of the complaint, with the deal due to be consummated in just two months.
“We continue to believe that, if allowed to close, the proposed transaction will create significant synergies and provide greater capacity for Amex GBT to continue to invest and innovate with new and better services for all customers and business travellers,” the statement added.
“We are evaluating our next steps.”
The DoJ complaint, filed in the US District Court for the Southern District of New York, argues that the proposed $570 million deal – the fifth acquisition by Amex GBT since 2018 – would harm competition for business travel management services to US global and multinational businesses.
Doha Mekki, Acting Assistant Attorney General of the Justice Department’s Antitrust Division, said: “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. American businesses will face the consequences, seeing higher prices, less innovation and fewer choices.”
The complaint alleges that senior Amex GBT executives viewed the acquisition as an opportunity for “consolidation” of the market for business travel management services for global and multinational customers and a respite from its recent customer losses to CWT.
The complaint further alleges that Amex GBT recognised that its valuation of the proposed acquisition should reflect the financial benefit of avoiding future loss business to CWT.
It alleges that the Amex GBT CEO wrote to its president saying that the company “need[ed] to consider how much we might lose to [CWT] each year in a [business as usual] scenario.”
During deal negotiations, CWT’s owners likewise believed Amex GBT should pay a higher price for CWT in recognition of the increased revenues Amex GBT would enjoy post-merger due to the reduction in “price pressure” from “removing [a] big competitor.”
Meanwhile, Amex GBT awaits the decision of the UK’s Competition and Markets Authority, which has also raised major concerns about the deal.
An interim report from the CMA concluded there is little evidence that other TMCs would be able to compete with the merged entity for global multinational customers.
Despite arguments laid out in Amex GBT’s earlier submission to the competition watchdog, the CMA said only Amex GBT and CWT, alongside BCD, have the scale and global coverage to compete for the largest clients.
The CMA’s decision is expected on January 26 2025.
