US DOJ may not challenge Aon / Willis Towers Watson merger: Report

It’s been reported that the US Department of Justice (DOJ) Antitrust Division may not challenge Aon’s acquisition of rival Willis Towers Watson (WTW), which, after the EC related divestment package, means additional disposals to remedy any DOJ concerns is perhaps now the most likely outcome.

Yesterday, our sister publication Reinsurance News commented on reports that the US Department of Justice (DOJ) has adopted a dual-track strategy for its review of Aon’s proposed acquisition of rival insurance and reinsurance broker Willis Towers Watson.

With simultaneous settlement talks, related to potential additional divestments or remedies we assume, said to be underway in tandem with preparations for a trial, in case it decides to challenge the deal.

As we’d previously reported, it was said that Aon had already made a proactive remedy offer to the US DOJ, as the broker sought to get on the front-foot of negotiations.

But another report from specialist antitrust and mergers and acquisitions (M&A) publisher CTFN, cites sources claiming that even staff at the US DOJ believe that ultimately the leadership at the department will not seek to challenge the transaction.

CTFN’s Diane Alter reports that staff at the US DOJ continue to have “real concerns”, which are largely related to the large corporate insurance broking segment, particularly where big multinationals buy their protection and how the coming together of Aon and Willis could impact competition there.

While DOJ staff are described as “hawkish” the acting leadership there does not seem disposed to bring a case against the deal, with a more conventional approach anticipated.

It’s likely this conventional approach would involve additional divestments, some of our sources have told us, as while the package of divestments from the European Commission was significant, it has not been seen to properly address concerns over the large corporate broking market.

The positive stance on the Aon and WTW merger from the European Commission, which was previously said to have been ready to approve the deal now there is a remedy package agreed, is reported by CTFN as having eroded the case for the DOJ.

That EC remedy package, which includes reinsurance broking unit and a package of other operations being sold to rival Gallagher, goes a long way towards satisfying concerns of the DOJ, we understand, although not as far as it wanted on the global corporate risk broking space, we’re told.

There are said to be other concerns at the US DOJ, including health benefits consulting business, private retiree health exchanges and pensions consulting and actuarial offerings in the US, according to CTFN’s report.

Interestingly, a source of CTFN told the publisher that the EC is considered to have “caved” on the issue of large, global corporate risk broking, with its remedy package not resolving concerns in that segment.

Which potentially puts the DOJ on the back foot, in having to find a remedy to that itself, as being the last biggest antitrust unit examining the Aon and Willis deal.

CTFN said that the DOJ is not expected to make any decision known until after the EC issues a statement on the merger, which is still slated for July.

Update: Aon announced that it is selling $1.4bn of its US retirement operations as part of efforts to gain US DOJ approval for the merger.

Also read:

– Aon / WTW: Willis Re sale supported, as industry wants broker choice.

– Aon sells German pensions business to LCP, as further step towards WTW merger.

– Aon & WTW agree $3.57bn sale of assets to Gallagher, including Willis Re.

– Gallagher likely buyer of $3bn Aon – Willis (WTW) divestments: Report.

– Aon expected to get conditional WTW acquisition approval from EC: Reuters.

– EC asks for feedback on sale of Aon / WTW assets, as MMC gains talent.

– Aon in proactive offer to US DOJ on Willis Towers Watson merger: Report.

– Aon – Willis Towers Watson divestiture reports expand to US & Bermuda.

– EC extends Aon – Willis Towers Watson merger deadline again.

– Aon – Willis Towers Watson merger deadline pushed back by EC.

– Aon – Willis Towers Watson merger assessed by Singapore competition authority.

– Aon & Willis Towers Watson merger may face EC statement of objection: Reuters.

– Aon & Willis Towers Watson merger to “significantly lessen competition”.

– Aon & WTW cite alt. capital, disintermediation & marketplaces in defence of merger.

– Aon & Willis Towers Watson reveal leadership of combined company.

– Willis Re divestment seen necessary for Aon – WTW merger to complete.

– If Aon / WTW leads to divestitures, AJG seen as “best fit” for Willis Re: KBW.

– EC investigates Aon / WTW deal, cites competition “concerns”.

– Aon + WTW to “extend proven model of catastrophe bonds” – CEO’s Case & Haley.

– Aon & Willis Towers Watson to merge.