The U.S. Department of Justice is objecting to corporate marriages like a scorned ex-lover in a sappy rom-com taking the “speak now or forever hold your peace” prompt at a wedding as a personal directive.
Case in point — insurance broker giants Aon and Willis Towers Watson announced Monday they’re abandoning plans for a $30 billion merger amidst intensifying DOJ scrutiny.
Trust In Antitrust
The decision to call off the merger comes just five weeks after the DOJ sued to block the deal, the first major antitrust action by a Biden administration that has vowed to take a strong and skeptical stance on corporate consolidation. With the agreement now void, Aon will pay a $1 billion termination fee to Willis.
The merger would have combined the forces of the second and third largest insurance brokers, creating the world’s largest insurance brokerage. The DOJ took issue with that notion, focusing on a few key points:
- In its lawsuit last month, the DOJ wrote the deal would “eliminate substantial head-to-head competition and likely lead to higher prices and less innovation, harming American businesses and their customers, employees, and retirees.”
- According to Reuters, the filing also cited an unidentified Aon executive who got candid with colleagues, confiding that Aon “has more leverage than we think we do and will have even more when (the) Willis deal is closed…we operate in an oligopoly which not everyone understands.”
Oligopol-oopsie: A note to insurance execs — when you’re trying to complete a merger to become the biggest insurance brokerage in the world, it’s probably not the best time to throw the “o”-word around.
Laughing To The Bank: On a quarterly earnings call last week, Marsh McLennan, the largest broker in the world, said the confusion and distraction among its two key rivals helped lead to a strong quarter that saw a 30% year-over-year increase in net income.