Aon & Willis Towers Watson merger may face EC statement of objection: Reuters

According to Reuters, the Aon and Willis Towers Watson (WTW) merger may face a statement of objections from the European Commission (EC), as the authority seeks concessions to address competition concerns.

It’s the latest turn in the largest insurance and reinsurance broker mega-merger and the suggestion from Reuters is that the EC has concerns the transaction could result in reduced price competition and restrict innovation.

Reuters said that sources suggest an antitrust warning is on the way, in the form of a formal statement of objections to the deal that will lay out the potential for the transaction to dent competition.

As we’ve said before, any objections to the acquisition of Willis Towers Watson (WTW) by Aon will need to deal with the question of whether the scale and market penetration of a combined Aon and Willis Towers Watson will give them more pricing power.

It’s still not clear exactly where in the business these concerns could lie. But areas of focus, such as how much choice would remain available to large clients, as well as choice in certain geographies where the deal could make Aon far more dominant as a market leader, are said to be the areas that concerns may be raised about.

The clock on the EC competition authority review of the merger deal had already been halted, while the European Commission (EC) waits for more data from the brokers to support their case to proceed, our sister publication Reinsurance News had explained before.

As our sister publication also explained, the uncertainty over the review by various countries competition authorities has heightened interest in the insurance and reinsurance broking merger among investors in the merger arbitrage and event driven hedge fund space.

Reuters said that if the EC publishes a statement of objections, as its sources suggest, it could derail Aon’s hopes of closing the merger in the first-half of this year.

But Aon would be able to respond to any statement, through concessions designed to address concerns raised by the competition authority, Reuters said.

It’s assumed concessions would mean divestments and while reinsurance unit Willis Re remains one area of focus, our sources also suggest that a regional or geographic focus could also be an angle for potential units that need to be offloaded in order to get the deal through.

Reuters also said that Aon has been “in informal discussions about concessions” but that no official offer has been made so far.

Also read:

– Aon & Willis Towers Watson merger to “significantly lessen competition”.

– Aon & WTW cite alt. capital, disintermediation & marketplaces in defence of merger.

– Aon & Willis Towers Watson reveal leadership of combined company.

– Willis Re divestment seen necessary for Aon – WTW merger to complete.

– If Aon / WTW leads to divestitures, AJG seen as “best fit” for Willis Re: KBW.

– EC investigates Aon / WTW deal, cites competition “concerns”.

– Aon + WTW to “extend proven model of catastrophe bonds” – CEO’s Case & Haley.

– Aon & Willis Towers Watson to merge.