American Express Global Business Travel blasted the timing of a U.S. Department of Justice lawsuit to block its proposed $570 million acquisition of CWT, litigation that came just 10 days before the January 20 change in presidential administrations.
“The Complaint did not need to be filed at this time, as the parties informed the DOJ that it was intended that the transaction be consummated in March 2025,” Amex GBT said in a statement.
The implication was that the Biden administration didn’t need to weigh in on the deal because it would be gone by the time the deal was ready to close. A Trump Justice Department would have had time to review it.
The Justice Department filed a lawsuit in New York on Friday against Global Business Travel Group, also known as Amex GBT, and CWT to block the deal that would have seen the marriage of the globe’s number 1 and number 2 largest travel management companies, respectively.
The DOJ alleged that the merger would lead to higher prices for large customers, provide them with reduced choices, and stifle innovation.
“This acquisition is the latest in a series of acquisitions by Amex GBT that will further consolidate an already consolidated market with only a handful of competitive options capable of serving customers with the most need for travel management services,” Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division said in a statement. “American businesses will face the consequences, seeing higher prices, less innovation and fewer choices.”
The lawsuit noted that this deal, if it closes, would be Amex GBT’s fifth acquisition of competitors since 2018, and that CWT sought a higher acquisition price because Amex GBT would benefit by taking out its largest competitor.
Large corporations have limited choice but to do business with “mega” travel management companies like Amex GBT, CWT and number 3, BCD Travel, because only they have the breadth of services that multinationals need, according to the lawsuit.
“Amex GBT and CWT have repeatedly identified each other and BCD Travel as their primary competitors for the largest customers, with few other companies capable of competing with them for the business of global and multinational customers, ” the lawsuit said.
There were some behind the scenes business travel revelations in the lawsuit:
- Amex GBT CEO Paul Abbott allegedly wrote an email to Amex GBT President Andrew Crawley in June 2023 saying that when it comes to the New Distribution Capability, the travel management company should “[d]o enough to appear progressive … but also use these pilots to highlight the gaps and block further activity until we have a scalable model.”
- CWT customers expressed misgivings about the merger as soon as the two companies announced it in March. One corporate client who had jumped from Amex GBT to CWT “worried that shift to [Amex] GBT will revert their service back to unsatisfactory levels they experienced before they moved to CWT.”
- Before acquiring Egencia from Expedia Group in 2021, Amex GBT estimated it would be able to renegotiate deals with Egencia customers and produce $50 million to $80 million from greater supplier “yields,” and that United, America and Delta airlines would each need to absorb $15 million in higher costs. The lawsuit said Amex GBT was successful in extracting these gains after acquiring Egencia.
- Abbott told an investor in November 2023 that Amex GBT was unconcerned about smaller business travel tech companies like Spotnana edging into the sector. “We haven’t lost a single customer to Spotnana in 2-3 years, and they have some decent features and functionality, but a long road to be proven at scale,” he said, according to the lawsuit.
In addition to the federal lawsuit to block the deal, the UK’s Competition and Markets Authority could make a final decision on whether to block the deal in the next two weeks. In November, the CMA found in an interim report that the merger could weaken competition.
Amex GBT’s Full Response
The following is Amex GBT’s statement in full about the lawsuit.
“We are disappointed by the DOJ’s legal action aimed at blocking the proposed transaction between Amex GBT and CWT and refute DOJ’s assertion that the proposed transaction would harm large customers. We firmly believe that the proposed transaction would bring significant benefits to all business travel customers, suppliers, and employees.
“Rather than account for how the business travel industry looks today, the DOJ’s Complaint takes a backward-looking view of the market and fails to recognize that the travel industry has transformed dramatically since the pandemic. Accordingly, the Complaint presents a distorted view of the marketplace, and attempts to support that view with factually incorrect statements and out-of-context snippets.
“A full review of all of the evidence submitted would support Amex GBT’s unambiguous commitment to customer choice, value, experience, and innovation. The Complaint completely disregards the emergence of numerous significant competitors in the business travel management industry and takes an intensely narrow view of competition. In addition, the DOJ’s focus on only the largest and most powerful customers headquartered in the U.S. that represent less than three percent of the global business travel market is unwarranted and unsupported by legal precedent.
“Furthermore, the Complaint did not need to be filed at this time, as the parties informed the DOJ that it was intended that the transaction be consummated in March 2025. We continue to believe that, if allowed to close, the proposed transaction will create significant synergies and provide greater capacity for Amex GBT to continue to invest and innovate with new and better services for all customers and business travelers.
“We are evaluating our next steps.”
The DOJ lawsuit to block the Amex GBT-CWT merger:
