CMA identifies competition concerns with Amex GBT-CWT deal

American Express Global Business Travel’s planned acquisition of CWT could lead to businesses paying higher prices and a ‘very small pool’ of providers capable of catering to global companies – that’s according to the UK’s Competition and Markets Authority (CMA) which announced its phase 1 decision today following the launch of a merger inquiry in June.

The CMA said in a statement that it is concerned Amex GBT’s $570 million acquisition of CWT “could lead to worsened quality of service, higher prices and/or reduced innovation efforts for global multinational (GMN) business travel customers, as a result of combining the current largest and third largest company operating in this market.”

The deal will be referred for a phase 2 investigation unless the TMCs offer acceptable undertakings to address the CMA’s concerns by 6 August.

“It is now up to GBT and CWT to offer solutions to our concerns, otherwise this case will proceed to a more in-depth phase 2 investigation,” said Mike Walker, chief economic adviser at the CMA.

In a statement provided to BTN Europe, Amex GBT said it now expects the deal to close in the first quarter of 2025. The TMC said it will continue to work with the regulatory authorities to “demonstrate how the acquisition of CWT will create synergies and provide greater capacity for investment and innovation”.

Eric J. Bock, Amex GBT’s chief legal officer and global head of M&A, added: “We believe that a comprehensive phase 2 analysis will demonstrate that the proposed transaction would result in many customer and supplier benefits, and that the business travel industry would remain highly competitive. In fact, as we’ve seen existing travel management companies grow and new tech-led companies enter the industry in recent years, we believe competition will continue to intensify.” 

The CMA said the deal was subject to an inquiry as the TMCs’ ‘combined share of supply’ in the UK last year was around 30 to 40 per cent, exceeding the 25 per cent threshold at which the authority has jurisdiction to review a merger.

It considered a wide range of evidence including submissions from Amex GBT and CWT and from their competitors, customers and suppliers “to understand better the competitive landscape and to get their views on the impact of the merger”.

Going into further detail, the CMA noted that GMN customers have distinct and often complex needs, and concluded that only “a handful” of TMCs are considered by such companies as capable of meeting their needs.

It continued: “The merged entity would be the clear market leader and the CMA found that the loss of competition between the parties would not be offset by the constraint posed by other suppliers in the market, including other traditional TMCs and more recent technology-driven entrants.

“In particular, there is only one other TMC for which the evidence consistently demonstrates that it is a good alternative to the parties, while the evidence on the strength of the few other remaining competitors is mixed.”

The CMA also considered whether the growth of competitors or the arrival of new entrants would prevent a substantial lessening of competition (SLC) arising but believes the barriers to entry or expansion into serving GMN customers are high.

The planned acquisition is also subject to a merger control investigation in the United States.