Government pressure appears to have led CMA to produce ‘supplementary interim report’ on corporate travel deal. Ian Taylor reports
The Competition and Markets Authority (CMA) reversed its view on the merger of corporate travel giants Global Business Travel (Amex GBT) and CWT last week in an about turn almost certainly influenced by the government.
The CMA published a ‘supplementary interim report’ on the impact of GBT’s $570-million takeover of CWT, announced last March, suggesting “a provisional interim report” in November formed part of a revised review process.
The November report found the merger likely to “substantially lessen competition” in the provision of corporate travel services to global multinationals.
But last week the CMA reported “further analysis” had led the inquiry group to reverse its findings, concluding that “CWT is a significantly weaker competitor [and] other suppliers will offer an alternative to the merged business”, meaning “the deal should be allowed to proceed”.
It gave industry players just seven days to respond.
The turnaround is curious. The CMA timetable for the investigation published on January 16, along with notice of a six-week extension to the inquiry, made no mention of a ‘supplementary interim report’ or a ‘provisional interim report’, referring only to “the interim report” in November.
However, on January 21 the government sacked CMA chair Marcus Bokkerink after instructing major regulators to “remove barriers to growth”, with business secretary Jonathan Reynolds declaring: “We want to see pro-business decisions.”
The government published a ‘Strategic Steer’ for the CMA on February 13. The same day, a blog post by CMA chief executive Sarah Cardell promised “a package of proposals for rapid change” including “faster decisions on mergers” and “a proportionate approach” to global deals “important to investor confidence” where action might be left to “other authorities”.
The GBT-CWT deal fits this ‘global’ category. In January, the US Department of Justice filed an antitrust lawsuit to block the merger.
In November, the CMA calculated GBT and CWT’s “combined share of supply” in the relevant UK market at 60%-70% and noted “little evidence that other TMCs compete to any meaningful extent . . . or that tech-led competitors are likely to become material competitors”.
Now it report “the Parties face a stronger competitive constraint than we previously thought” with two of the inquiry group’s four members changing their minds to “provisionally conclude the merger may not be expected to result” in substantially less competition (SLC). Two members still conclude it would, but “no SLC arises . . . unless a two-thirds majority of the group finds in favour”.
The updated report notes CWT’s weakness after entering pre-pack bankruptcy in November 2021. But this is not new evidence.
It includes findings supported by redacted data, making it impossible to check, leading to paragraphs like this: “The cumulative effect of CWT’s financial difficulties appears to have had an [], as reflected below. As a result, CWT potentially faces a trajectory of [], resulting in [] which will [].”
The report also notes “none of these elements” of new analysis “in isolation would be sufficient to revise the conclusion in the Interim Report”. Rather, it suggests that it was “the finely balanced nature of the decision” which led “two members” of the inquiry group to change their view.
A final decision is due by March 9.