Now that global brokerage giants Aon plc (Aon) and Willis Towers Watson (WTW) have cancelled their merger, the former has withdrawn its request for merger clearance by the Australian Competition & Consumer Commission (ACCC).
This week, Aon and WTW confirmed they have cancelled their proposed mega-merger after reaching an “impasse” with the United States Department of Justice (DOJ).
The ACCC's investigation indicated Aon and WTW are two of the three major brokers capable of providing commercial risk broking to large customers, reinsurance broking, and employee benefits services in Australia. Therefore, it forecasted that the merger would substantially lessen competition in the supply of commercial risk, reinsurance, and employee benefits broking and advisory services in Australia.
“We were concerned that the combination of Aon and WTW would have removed a significant competitive constraint and might have led to price increases or reduced levels of service for large commercial insurance customers, insurers, and customers requiring employee benefits in Australia,” said ACCC Commissioner Stephen Ridgeway.
“Mergers between close competitors in highly concentrated markets will attract close ACCC scrutiny.”
The proposed merger was first announced on March 09, 2020. The ACCC began its merger review on October 02, 2020, and expressed preliminary concerns about the transaction in a Statement of Issues on February 18, 2021.
As part of its review, the regulator closely engaged with the US DOJ, European Commission, and New Zealand Commerce Commission, among other competition regulators globally. However, its review has been suspended since April 23, 2020, while awaiting information from the merger parties.
Meanwhile, since the announcement, Aon and WTW had faced challenges after challenges until the US DOJ brought an anti-trust lawsuit against the merger – ending the deal.
Aon chief executive officer Greg Case previously commented: “The DOJ position overlooks that our complementary businesses operate across broad, competitive areas of the economy. We are confident that the combination would have accelerated our shared ability to innovate on behalf of clients, but the inability to secure an expedited resolution of the litigation brought us to this point.”