DOJ sues to block American Express’s GBT acquisition

The U.S. Department of Justice filed a civil antitrust lawsuit in mid-January to prevent Global Business Travel Group Inc. (Amex GBT), the world’s largest business travel management company, from acquiring its rival and third-largest business travel management company CWT Holdings LLC. The world’s leading business travel management company. The complaint, filed in the U.S. District Court for the Southern District of New York, alleges that the proposed $570 million deal — Amex GBT’s fifth acquisition of another travel management company since 2018 — would harm competing business travel management services businesses for U.S. global and multinational companies.

“U.S. businesses rely on travel management companies to connect employees, control travel costs, streamline travel booking and expense management, and ensure employees are available when they are available,” said Acting Assistant Attorney General Doha Mekki of the Department of Justice’s Antitrust Division. Safety While Traveling,” a prepared statement. “This acquisition is the latest in a series of acquisitions by Amex GBT that will further consolidate an already consolidated market with only a few competitive options to serve customers who need travel management services most. U.S. businesses will face The consequences: higher prices, less innovation, less choice.”

As alleged in the DOJ complaint, Amex GBT and CWT expect the proposed acquisition to harm competition and benefit the combined company at the expense of customers. The complaint alleges that senior American Express GBT executives viewed the acquisition as an opportunity to “consolidate” the business travel management services market for global and multinational customers and as a respite from CWT’s recent loss of customers. The complaint also alleges that Amex GBT recognized that its valuation of the proposed acquisition should reflect the financial benefit of avoiding the loss of CWT’s future business. For example, its CEO wrote to the president that the company “needs to consider how much we might lose to (CWT) each year under a (business as usual) scenario.” During deal negotiations, CWT’s owners similarly argued that Amex GBT should Pay a higher price for CWT because Amex GBT will earn more revenue after the merger due to reduced price pressure due to the elimination of a large competitor.

The merger of Amex GBT and CWT would combine two of the three largest players in business travel management services for U.S.-based global and multinational companies, giving the combined company a significant presence in a market where one of the largest owners is share. The CWT admits this is an “oligopoly”. Few other companies can effectively provide travel management services to US-based multinational companies at the scale of Amex GBT and CWT.

The U.S. Department of Justice said that currently, Amex GBT and CWT compete fiercely to provide travel management services to large enterprises and companies with complex travel needs. CWT has recently begun adopting new and innovative strategies to improve service and lower prices in order to win Amex GBT’s business. As a result, Amex GBT has recently ceded several important bidding opportunities from large corporate clients to CWT. The U.S. Department of Justice said that if Amex GBT is approved to acquire CWT, this fierce competition will fail and many businesses and employees will face higher costs for services that are critical to their productivity and operations.

Amex GBT is a Delaware public company with its principal executive offices in New York City and its operational headquarters in London. In 2023, Amex GBT managed approximately $28.2 billion in total transaction volume and $2.29 billion in revenue.

CWT Holdings LLC is a privately held company headquartered in Minnetonka, Minnesota. In 2023, CWT will manage approximately $14 billion in total transaction volume and generate approximately $850 million in revenue.

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