DOJ Takes Action: A Bold Lawsuit Against the Amex GBT and CWT Merger

The US Department of Justice (DOJ) has initiated a civil antitrust lawsuit aimed at preventing American Express Global Business Travel from finalizing its proposed $570 million acquisition of CWT.

This lawsuit, lodged in the US District Court for the Southern District of New York, claims that the acquisition would negatively affect competition in corporate travel management services for US-based global and multinational corporations. Last week, media reports indicated that the DOJ was preparing to act against the Amex GBT-CWT agreement.

This action occurs as the UK’s Competition and Markets Authority (CMA) is slated to make its own determination regarding the acquisition by January 26.

Doha Mekki, acting assistant attorney general at the DOJ’s Antitrust Division, remarked: “This acquisition represents the latest in a series of consolidations by Amex GBT, further tightening an already concentrated market with only a few competitive alternatives available to meet the demands of customers requiring travel management services.

“American enterprises will bear the repercussions, experiencing increased costs, diminished innovation, and limited choices.”

In a statement, Amex GBT expressed it was “assessing our forthcoming actions” and was “disheartened” by the DOJ’s intervention, which it contended was grounded in a “retrogressive perspective of the market.”

“We are unhappy with the DOJ’s legal measures intended to thwart the proposed deal between Amex GBT and CWT and dispute the DOJ’s claim that the proposed deal would negatively impact large clients,” stated the TMC.

“We firmly assert that the proposed transaction would yield considerable advantages for all business travel customers, suppliers, and staff.

“The lawsuit entirely overlooks the rise of numerous substantial competitors within the business travel management sector and adopts a tremendously narrow interpretation of competition.

“Furthermore, the DOJ’s emphasis solely on the largest and most influential clients based in the US, who constitute less than three percent of the global business travel market, is unfounded and lacks legal support.”

Intensified examination of the Amex GBT-CWT agreement has escalated recently, concentrating on the repercussions for multinational and global firms which, according to the UK’s CMA and now the DOJ in the US, would face few valid choices in the market for managing their travel programs.

The DOJ’s complaint additionally claims that Amex GBT was spurred to commence the transaction as a means to provide “relief from its recent client losses to CWT,” referencing communications from the CEO acknowledging that the proposed deal’s valuation should account for the financial advantage of preventing future customer losses to CWT.

It also cited CWT communications that indicated how Amex GBT would experience a post-merger alleviation in “price pressure” by eliminating “a significant competitor.”

Amex GBT has already contested the regulatory methods employed by the UK’s CMA as being disconnected from market realities, and its critique of the regulator’s interim report was also released on Friday (January 10).

The DOJ’s lawsuit arrives during the concluding days of the Biden administration, and next week it will be handed over to the incoming Trump administration, which many believe will adopt a more lenient stance toward scrutinizing mergers and acquisitions.