An interim report from the Competition and Markets Authority investigating the proposed acquisition of CWT by American Express GBT has concluded that there is little evidence that other TMCs can compete 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 report reiterated concerns that a merged Amex GBT and CWT would be “the clear market leader” at around twice the size of BCD and that the proposed acquisition of CWT by will “substantially lessen competition” for large global organisations.
It added: “While we acknowledge the ongoing technological innovation in this market, we have not seen evidence indicating that technology could substitute a comprehensive business travel agency offering, or that tech-led competitors are likely to become material standalone competitors in the next two years.
“Finally, we have found that any TMC looking to enter or gain more scale in business travel agency services for global multinational customers would face substantial barriers to entry and expansion.”
The report also concluded that if the deal did not go ahead, CWT “has taken steps to recover, improving its financial performance” since it entered Chapter 11 bankruptcy post-Covid, and would “continue to be a significant competitor to and constrain GBT in the supply of business travel agency services to global multinationals”.
Martin Coleman, CMA Chair, said: “Despite the increased use of video conferencing, business travel continues to be a necessary component for effectively doing business for many companies and a major area of expenditure.
“We have provisionally found that only a small number of business travel agencies are considered capable of meeting the needs of the largest companies and this deal could reduce competition and increase costs.”
Interested parties now have until 5pm on November 27 to respond the interim report, which is part of the CMA’s ‘phase 2’ investigation into the planned deal.
Amex GBT responded to the report in a statement, saying it “fundamentally disagrees” with the CMA’s interim assessment and will “continue to work collaboratively with the CMA to demonstrate that the transaction should be approved by the CMA”.
It said the interim report “does not reflect the evidence presented on the highly competitive and dynamic nature of the business travel sector”.
“Instead, the CMA has erroneously focused on a narrow segment that makes up a small fraction of business travel spend,” it argued.
“The CMA has ignored multiple sources of evidence that show clearly that Amex GBT consistently competes for all customers, including the largest global customers, with numerous other travel management companies that operate globally.”
It said it would respond to the interim report to “correct several errors and misconceptions about how the business travel sector operates” and to demonstrate that the CWT acquisition will not harm competition in the UK or elsewhere.
It said Amex GBT still expects the transaction to close in the first quarter of 2025.
Eric J. Bock, Amex GBT’s Chief Legal Officer and Global Head of M&A, said: “We are disappointed by the CMA’s interim report. The CMA has not appreciated the evidence that reflects the breadth of the business travel industry and its dynamic and competitive nature.
“In recent years, numerous travel management companies have expanded their offerings while other companies have entered the industry and are rapidly growing their businesses.
“We firmly believe that the proposed transaction would result in many customer and supplier benefits and that the business travel industry would remain highly competitive. We will be engaging further with the CMA to demonstrate why its concerns are not justified.”
