The U.S. Department of Justice (DOJ) has filed a lawsuit to prevent American Express Global Business Travel (Amex GBT) from acquiring CWT, a deal worth $570 million. The antitrust division of the DOJ claims that the merger would severely impact competition in the business travel sector, particularly among multinational clients. The lawsuit asserts that combining these two major players would create a monopoly-like scenario, stifling innovation, increasing costs, and reducing options for large corporations that rely on these services.
Amex GBT and CWT, two of the largest travel management companies (TMCs), are already fierce competitors, catering to multinational corporations that spend significant amounts on business travel. According to the DOJ, the merger would harm these businesses by limiting their ability to access competitive rates and diverse services. The suit emphasizes that while other TMCs, such as Flight Centre Travel Group and Corporate Travel Management, do compete in the market, they do not have the scale or resources to match the competition currently offered by Amex GBT and CWT.
Both Amex GBT and CWT are ranked as some of the largest U.S. travel agencies, with Amex GBT at third place, CWT at fifth, and BCD Travel in fourth on Travel Weekly’s Power List. These three companies dominate the business travel sector, and the DOJ’s concern is that their merger would create a dominant force, leaving smaller companies struggling to keep pace.
Amex GBT has publicly responded to the lawsuit, expressing disappointment over the DOJ’s actions and defending the proposed transaction. The company insists that the merger would offer significant benefits for customers, suppliers, and employees alike. It argued that the DOJ’s view of competition is outdated and overly simplistic, failing to account for the dynamic shifts in the business travel industry, especially following the COVID-19 pandemic. Amex GBT claims that new competitors have emerged, challenging the market status quo, and that the DOJ is overly fixated on the largest U.S.-based customers, who represent only a small portion of the global market.
The DOJ’s suit points out that multinational companies often spend over $100 million per year on business travel, making them prime customers for the TMCs. Data indicates that Amex GBT, CWT, and BCD Travel are the main competitors for these large accounts. The merger, the DOJ argues, would likely lead to higher prices, fewer choices, and a reduction in the quality of services offered. Additionally, the DOJ claims that Amex GBT and CWT were aware that their combination would limit competition. In a 2021 statement, an Amex GBT investor acknowledged that the company competes primarily with CWT and BCD Travel for large, multinational customers.
Amex GBT’s rebuttal contends that the DOJ has taken an overly narrow approach by failing to recognize the significant transformation in the travel industry. The company argues that the lawsuit overlooks the rise of numerous new competitors that have brought fresh perspectives and innovative solutions to the sector. Furthermore, Amex GBT emphasizes that the DOJ’s focus on large U.S.-based customers is misguided, as these companies represent less than 3% of the global business travel market.
This ongoing legal battle also raises the question of whether the incoming political administration under former President Trump would align with the current DOJ’s stance. Under the Biden administration, the DOJ has pursued several high-profile antitrust cases, signaling a robust approach to corporate concentration. As the legal process unfolds, the future of the Amex GBT-CWT deal remains uncertain, with the potential for broader implications for the business travel industry and antitrust enforcement.
The case underscores the evolving landscape of competition law, where regulators are increasingly scrutinizing corporate mergers and acquisitions, especially in concentrated industries with significant global impacts.
