The US Justice Department has filed a civil antitrust lawsuit in an effort to block the $570 million takeover of CWT by rival Global Business Travel Group (Amex GBT).
The complaint, filed on Friday in the U.S. District Court for the Southern District of New York, alleges that the proposed transaction would harm competition for business travel management services to US global and multi-national businesses.
The Department of Justice also noted that the proposal if agreed would be Amex GBT’s fifth acquisition of another travel management company since 2018.
Amex GBT is the largest business travel management company in the world, while CWT is the third-largest.
Amex GBT and CWT compete fiercely to provide travel management services for large businesses and those with complex travel needs.
CWT had recently begun pursuing new and innovative strategies to improve service and reduce prices in order to win over business from Amex GBT, according to the US DoJ.
As a result, Amex GBT recently lost several significant bid opportunities for large business customers to CWT.
The complaint alleges that senior Amex GBT executives viewed the acquisition as an opportunity for “consolidation” of the market for business travel management services for global and multinational customers and a respite from its recent customer losses to CWT.
The complaint further alleges that Amex GBT recognised that its valuation of the proposed acquisition should reflect the financial benefit of avoiding future loss business to CWT.
“If Amex GBT is permitted to acquire CWT, this intense competition would be lost, risking higher prices, less innovation and fewer choices – costs that will be borne by the many businesses and employees for whom these services are critical to their productivity and operations,” the Justice department added.
Acting assistant attorney general Doha Mekki of the Justice Department’s antitrust division said: “American businesses rely on travel management companies to connect employees, control travel costs, make travel booking and expense management easier, and ensure their employees’ safety during travel.
“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.
“American businesses will face the consequences, seeing higher prices, less innovation and fewer choices.”
An independent UK Competition and Markets Authority (CMA) inquiry group provisionally found in November that the proposed deal “has the potential to substantially lessen competition”.
Travel Weekly has approached Amex GBT for comment.