Proposed $570M Acquisition of CWT by Amex GBT Challenged by Department of Justice

In a significant development, the Justice Department has filed a civil antitrust lawsuit in the U.S. District Court for the Southern District of New York to prevent Global Business Travel Group Inc. (Amex GBT) from acquiring its competitor, CWT Holdings LLC (CWT). Amex GBT is currently the world’s largest business travel management company, while CWT ranks third globally.

The complaint alleges that the proposed $570 million transaction would harm competition for business travel management services for U.S. based global and multinational businesses. This would mark Amex GBT’s fifth acquisition of another travel management company since 2018.

Travel management companies play a crucial role for businesses, helping to connect employees, manage travel costs, streamline booking and expense management, and ensure employee safety during travel. Concerns are that the proposed acquisition would result in higher prices, less innovation, and fewer choices for American businesses.

The complaint alleges that both Amex GBT and CWT anticipated that the proposed merger would harm competition and benefit the merged firm at the expense of its customers. Amex GBT executives are suggested to have seen the acquisition as an opportunity to consolidate the market for business travel management services and counter recent customer losses to CWT.

The document also alleges that Amex GBT’s valuation of the proposed acquisition took into account the financial benefit of avoiding potential future loss of business to CWT. During negotiation stages, CWT’s owners reportedly believed Amex GBT should pay a higher price for CWT in recognition of the increased revenues Amex GBT would enjoy post-merger due to the reduction in competition.

Amex GBT and CWT are two of the three largest players in business travel management services for global and multinational companies in the United States. The merger would give the combined entity a significant market share in a market that even CWT’s large owners acknowledge as oligopolistic.

Currently, Amex GBT and CWT compete fiercely in providing travel management services for large businesses and those with complex travel needs. The complaint states that CWT had recently begun implementing innovative strategies to improve service and reduce prices, winning over business from Amex GBT. If the acquisition proceeds, such intense competition would be lost, potentially leading to higher prices, less innovation, and fewer choices for businesses and their employees.

In 2023, Amex GBT managed transactions worth approximately $28.2 billion, earning revenues of $2.29 billion. Conversely, CWT managed transactions worth about $14 billion, with revenues of about $850 million.