DOJ Sues to Block $570 Million Deal Between AMEX GBT and CWT

The U.S. Department of Justice (DOJ) has filed a lawsuit seeking to prevent a $570 million merger between corporate travel giants American Express Global Business Travel (Amex GBT) and CWT Holdings, citing concerns over reduced competition in the travel management sector. According to Bloomberg, the lawsuit was filed Friday in federal court in New York and alleges that the deal would stifle competition, leading to higher prices and fewer options for businesses.

“If completed, this deal would extinguish fierce head-to-head competition between Amex GBT and CWT and risk higher prices, fewer choices, and less innovation,” the DOJ stated in its complaint. The department warned that the merger could negatively impact numerous companies that rely on travel management services, which are essential for many sectors of the U.S. economy.

The legal action comes as part of the Biden administration’s broader effort to curb excessive corporate consolidation. According to Bloomberg, the administration has made competition policy a cornerstone of its economic strategy, aiming to increase market fairness and reduce monopolistic practices across various industries. However, responsibility for the case will now shift to the incoming Trump administration, with Gail Slater expected to take over leadership of the DOJ’s antitrust division.

Related: The American Express Decision and its Critics

The deal between Amex GBT and CWT was initially announced in March, with the companies aiming to finalize the transaction in the first quarter of the year. Both companies specialize in managing corporate travel and event planning for large businesses. Per Bloomberg, American Express holds a minority stake in Amex GBT after spinning off the company in 2014, while CWT is majority-owned by investment firms including Redwood Capital Management and Monarch Alternative Capital.

The DOJ’s move comes after executives from both companies met with senior officials at the department’s antitrust division earlier this week in an attempt to defend the merger. The companies have argued that the corporate travel management market remains competitive, pointing to rivals such as BCD Travel and Navan Inc. Despite their efforts, the Justice Department remains unconvinced that the deal would preserve healthy competition in the industry.

As of now, both Amex GBT and CWT have declined to comment on the lawsuit. The case, officially titled U.S. v. Global Business Travel Group Inc., has been filed in the U.S. District Court for the Southern District of New York.

The Justice Department’s lawsuit underscores a growing focus on enforcing antitrust laws in corporate America. According to Bloomberg, the Biden administration has taken a hard stance against mergers that it believes could harm consumers by reducing competition and driving up prices.

Source: Bloomberg