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US government sues Aon over blocking Willis Towers Watson over threat $ 30 billion deal it plans to create the world’s largest insurance broker.
The Justice Department said in a complaint Wednesday that the combination would “eliminate significant head-to-head competition and likely lead to higher prices and less innovation, and harm American businesses and their customers, employees and retirees.”
Along with Marsh McLennan, Aon and Willis form a trio that “dominate the competition for insurance brokerage for the largest U.S. companies, almost all of which are clients of at least one of them,” the DoJ said.
The big three have features that smaller brokers can’t replicate, such as global service, better data and analysis, and a “separate sales approach,” for large business risk managers who bought insurance, the DoJ said. In terms of healthcare, they were able to design custom products for large multinational customers.
The combination “will turn the Big Three into Big Two,” and the united Aon-Willis “will use that lever against American business,” the complaint says.
Shares of the company fell in the afternoon trading in New York, with Aon falling 3 percent and Willis down 7 percent.
Worldwide purchasing has regulatory probes in several jurisdictions, most notably the US and the EU. In commercial insurance brokerage, Aon and Willis have a combined share of at least 40 percent in some critical insurance markets, such as property damage, third-party liability and financial risk.
“Today’s action demonstrates the Department of Justice’s commitment to maintaining competition that directly and indirectly benefits Americans across the country and halting harmful settlement,” said U.S. Attorney Merrick Garland.
The planned end date of the agreement has already passed from the first half of the year 2021 to the third quarter, as regulatory processes have been extended.
Last month, Aon and Willis agreed to the download $ 3.6 million the value of assets, including Willis Re, opposed to broker Gallagher, in an attempt to silence European regulatory competition.
Aon said the agreement addressed the questions raised by the European Commission “and is intended to address some of the issues raised by regulators in other jurisdictions.”
Aon also agreed earlier this month to sell the U.S. retirement business to New York’s Aquiline Capital Partners and the Aon Retiree Health Exchange to Alight. Aon said it was “intended to address some of the issues raised by the U.S. Department of Justice.”
The DoJ said in the complaint that the proposed divestments were not sufficient to address its concerns. In mediating the assets, financial and death risks for large U.S. customers and the health benefits, the remedies presented by the group “would not come close to fully maintaining the competition that would be lost as a result of the proposed merger.”
Aon did not immediately respond to the request for comment. Willis Towers Watson declined to comment.
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