Aon-WTW Merger: European Commission Shares Competition Concerns

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Aon-WTW merger: European Commission shares competition concerns

Following much media speculation, it has now been confirmed that Aon Plc’s swoop for fellow broking behemoth Willis Towers Watson (WTW) is undergoing closer examination by the European Commission (EC) under the merger regulation of the European Union.

“Aon and Willis Towers Watson are two leading companies in the market for insurance and reinsurance brokerage,” said Margrethe Vestager, the EC’s executive vice president responsible for competition policy, in a release. “They help companies with their risk management and with finding the right insurers for their needs.

“We have opened an in-depth investigation to assess carefully whether the transaction could lead to negative effects for competition, less choice, and higher prices for European customers in the commercial risk brokerage market.”

The commission – which assesses mergers and acquisitions to prevent market concentrations that significantly impede effective competition in the European Economic Area or any substantial part of it – decides whether to grant approval, known as Phase I, or to proceed to Phase II which is an in-depth review.

Both headquartered in London while domiciled in Ireland, Aon and WTW are present in more than 120 and 140 countries, respectively. In its initial market probe, the antitrust regulator identified competition concerns in relation to the supply of commercial brokerage services.

The EC noted: “In particular, the commission is concerned that the transaction may reduce the competition as regards: brokerage services to large multi-national customers in the risk classes property and casualty, financial and professional services, credit and political risk, cyber, and marine; brokerage services to customers of all sizes for space and aerospace manufacturing risks as well as in a few additional risk classes in specific national markets.”

Additionally, the commission will now further examine the provision of reinsurance brokerage services, as well as consulting and administration services. Aon, meanwhile, said it looks forward to continuing its dialogue with the EC throughout the process.

“The Phase II review is a common next step in the review process for a transaction of this size and complexity under EU merger regulation, and the firm remains on track to close the combination in the first half of 2021,” asserted Aon in a separate release.

“As stated previously, Aon’s and Willis Towers Watson’s businesses are complementary, operating across broad, very competitive areas of the economy, and Aon remains confident of a positive outcome without any divestitures. Aon expected a thorough review of this combination and will continue to work closely with all the relevant regulators, including the EC.”

According to the commission, it has until May 10 next year to decide on the merger.