DOJ Sues Aon to Block $30B Merger with Willis Towers Watson

The U.S. Department of Justice filed suit in D.C. federal court Wednesday to block Aon PLC’s planned $30 billion merger with Willis Towers Watson, claiming that uniting two of the “Big Three” global insurance brokers would undoubtedly result in less innovation and higher prices in the industry.

AonPhoto Credit: Shutterstock

In his official statement, Attorney General Merrick Garland said that American companies and consumers rely on competition between Aon and Willis Towers Watson to lower prices for vital services, including health and retirement benefits consulting.

“Today’s action demonstrates the Justice Department’s commitment to stopping harmful consolidation and preserving competition that directly and indirectly benefits Americans across the country,” Garland said. “Allowing Aon and Willis Towers Watson to merge would reduce that vital competition and leave American customers with fewer choices, higher prices and lower-quality services.”

The complaint alleges the transaction will affect five separate insurance markets. The combined company would have at least a 40% share of each of those markets, including 95% of the retiree exchange market, through which employers and unions offer Medicare health and prescription drug insurance plans, the complaint said.

In a statement on Wednesday, a representative for Aon said the DOJ’s suit “reflects a lack of understanding” of the company’s business processes, the clients it serves, and the markets it operates in.

“While this proposed combination was not developed with the pandemic in mind, the impact of the pandemic underscores the need to address similar systemic risks including cyberthreats, climate change and the growing health and wealth gap which our combined firm will more capably address,” the statement said. “We continue to make material progress with other regulators around the world and remain fully committed to the benefits of our combination.”

According to the complaint, Aon and Willis Towers Watson are the second and third-largest insurance brokers in the world. It also claimed Aon and Willis Towers Watson directly compete to provide many large U.S. companies with risk management services and assistance crafting their health and retirement benefits.

“American businesses pay billions of dollars a year to insurance brokers for their services, and depend on competition among brokers to deliver these services at high quality and low cost,” the complaint stated.

Acting Assistant Attorney General Richard Powers, head of the DOJ’s Antitrust Division, said Aon and Willis Towers Watson did not offer any immediate fixes for the issues enforcers had flagged until recently, and that the offers that were made “fall far short” of what would be needed to remedy the detrimental effects caused by the merger.

“Our action today seeks to prevent the parties from rolling back the clock to a time where there was less competition than exists today,” he said.

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