The United States Department of Justice (DOJ) has filed a civil antitrust lawsuit in an effort to block American Express Global Business Travel's $570 million purchase of its rival company CWT.
The deal, announced in March, would mark Amex GBT’s fifth travel management company acquisition since 2018, including its 2018 acquisition of HRG and its 2021 acquisition of Egencia. The DOJ argued this latest deal would hurt competition in the business travel management space in the U.S. and globally.
“American businesses rely on travel management companies to connect employees, control travel costs, make travel booking and expense management easier and ensure their employees’ safety during travel,” said Doha Mekki, acting assistant attorney general of the Justice Department’s Antitrust Division.
“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.”
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The DOJ’s complaint alleges that senior executives at Amex GBT considered the transaction a “consolidation” opportunity — and also that the company saw it as a way to theoretically avoid future potential losses to CWT, noting that during negotiations CWT had indicated Amex GBT should pay more because it would benefit from likely reduced “price pressure” following the merger from “removing [a] big competitor.”
Amex GBT said in a statement it is disappointed by the legal action, adding it refutes the assertion that the transaction would harm large customers and that it believes the deal would benefit all customers, employees and suppliers.
"Rather than account for how the business travel industry looks today, the DOJ’s complaint takes a backward-looking view of the market and fails to recognize that the travel industry has transformed dramatically since the pandemic," Amex GBT said. "Accordingly, the complaint presents a distorted view of the marketplace and attempts to support that view with factually incorrect statements and out-of-context snippets."
The company argued that the complaint doesn't account for the emergence of other competitors in the space in recent years.
"The DOJ’s focus on only the largest and most powerful customers headquartered in the U.S. that represent less than three percent of the global business travel market is unwarranted and unsupported by legal precedent," Amex GBT said.
When Amex GBT announced the proposed acquisition, CEO Paul Abbott said the deal, then expected to close by the end of 2024, would pose a significant opportunity for the company.
“We will welcome 4,000 new customers to the proven Amex GBT software and services model, create more choice for customers and more opportunities for our people,” Abbott said.
And the DOJ isn’t the only party to voice concern.
In June, the United Kingdom’s Competition and Markets Authority (CMA) opened an investigation into the deal. In regard to that news, Amex GBT said it had “voluntarily notified the CMA of the transaction for antitrust approval in the U.K.”
Not long after in July, the CMA announced it was examining more closely. In August, the CMA referred the case for an in-depth investigation and has posted updates to the investigation online. In November, for example, the CMA said it “provisionally” had identified competition concerns related to the acquisition. The page was most recently updated Friday with a note that “Parties’ joint response to interim report published.”