The US Department of Justice has filed a lawsuit in an attempt to prevent the acquisition of CWT, for $570 million, by competitor Global Business Travel Group (Amex GBT).
The lawsuit, which was filed on Friday in the US District Court for the Southern District of New York, claims that the proposed deal would harm competition for business travel management services to global and multinational US companies.
The Justice Department also noted that the acquisition, if approved, would be the fifth acquisition of another travel management company by Amex GBT since 2018.
Amex GBT is the largest business travel management company in the world, while CWT is the third largest.
Amex GBT and CWT compete fiercely to provide travel management services to large corporations and businesses with complex travel needs.
CWT had recently begun to pursue new and innovative strategies to improve services and lower prices in order to gain customers from Amex GBT, according to the US Department of Justice. As a result, Amex GBT recently lost several significant bidding opportunities for large business customers to CWT.
The complaint alleges that senior executives of Amex GBT saw the acquisition as an opportunity to ‘consolidate’ the market for business travel management services for global and multinational clients and as a ‘breather’ from its recent loss of clients to CWT.
The complaint also alleges that Amex GBT recognized that the valuation of the proposed acquisition should reflect the economic benefit of avoiding future loss of business for CWT.
“If Amex GBT is allowed to acquire CWT, this intense competition will be lost, with the risk of higher prices, less innovation and fewer choices – a cost that will be borne by many businesses and employees for whom these services are vital to their productivity and operations,” the US Department of Justice added.
In a statement, the Acting Assistant Attorney-General, Doha Mekki, of the antitrust division of the ministry, said: “U.S. businesses rely on travel management companies to provide connectivity to their employees, control travel costs, facilitate travel reservations and expense management, and ensure the safety of their employees during travel. This acquisition is the latest in a series of acquisitions by Amex GBT that will further consolidate an already consolidated market with few competitive options capable of serving customers with the greatest needs for travel management services. U.S. businesses will face the consequences, experiencing higher prices, less innovation and fewer options.”
An independent investigation team of the UK Competition and Markets Authority (CMA) found in November that the proposed deal “has the potential to significantly reduce competition”.
