The U.S. Department of Justice has initiated legal proceedings to halt the proposed $570 million acquisition of CWT Holdings by American Express Global Business Travel (Amex GBT) on antitrust grounds. The lawsuit, filed in the federal court in New York, underscores the administration’s concern that the merger would stifle competition within the corporate travel management sector.
The DOJ’s legal filing articulates fears that the combination of these two competitors would potentially lead to inflated pricing, a reduction in customer choices, and a curtailment of innovation in the market. The lawsuit highlights the importance of maintaining competitive dynamics, especially within an economic framework heavily reliant on business travel services (Bloomberg Law).
Amex GBT responded to the DOJ’s objections, criticizing the complaint for its narrow focus and lack of consideration for the changes that have taken place in the travel sector since the pandemic. The company remains optimistic about realizing significant efficiencies and enhanced innovation opportunities if the deal is approved.
The merger is also under scrutiny across the Atlantic, where the UK’s Competition and Markets Authority (CMA) has raised its own concerns. An interim report was released in November that mirrored the DOJ’s worries, emphasizing impacts on multinational corporations with extensive travel budgets. The CMA has scheduled a decision by late January on whether to permit or obstruct the merger.
Both Amex GBT and CWT maintain that despite the proposed merger, the industry remains competitive, pointing to robust players like BCD Travel and Navan Inc. Notably, Amex GBT, with $28 billion in business travel transactions in 2023, is the leading entity in this space, while CWT ranks third with $14 billion. Together with BCD Travel, these firms command more than 70% of the market share for managing travel for global corporations spending $30 million or more annually on travel.
The DOJ’s case, filed under US v. Global Business Travel Group Inc., 25-cv-00215, will pivot on whether it successfully persuades the court of the potentially harmful effects this merger could have on the market’s competitive landscape.