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Antitrust Enforcement Is Back, and the Aon-Willis Towers Watson Deal Is Just the Beginning

What increasing attention to antitrust rules could mean for financial services deals, according to experts.

Three years ago, attorney Michael Weiner declared that “antitrust is cool again” in a New York Law Journal article.  

Now, the Steptoe & Johnson attorney’s prediction is coming to fruition. One high-profile example: On Monday, Willis Towers Watson and Aon announced the termination of the $30 billion merger they had publicized in March, ending litigation with the Department of Justice. 

For antitrust enforcement in the United States, this news could be an indicator of what’s to come.   

On July 9, President Joe Biden announced an executive order that aims to address antitrust regulations in the United States. He has also made three high-profile appointments that signal interest in emphasizing antitrust enforcement, according to Weiner.

“Even more important to me than the executive order, which just lays out the groundwork, are the appointments he’s made,” Weiner said. 

These include bringing on Columbia University professor Tim Wu as a special assistant to the president for technology and competition policy. Another Columbia professor, Lina Kahn, was tapped as chair of the Federal Trade Commission. Then on July 20, Biden nominated lawyer Jonathan Kanter for assistant attorney general for antitrust.  

Meanwhile, according to Weiner, there are several proposed bills in Congress — written by politicians on both sides of the aisle — attempting to address antitrust considerations as well. 

According to John Johnson, chief executive officer at Edgeworth Economics, even the statement that Attorney General Merrick Garland issued on Monday regarding the Aon and Willis Towers Watson deal signals a “more aggressive posture” from this administration.  

“The decision to abandon this anti-competitive merger will help preserve competition in insurance brokering,” that statement said. The Department of Justice’s decision to pursue litigation against Aon and Willis Towers Watson set it apart from other regulatory bodies like the European Commission, which recently approved the deal.  

“The DOJ position stands in contrast to the rest of the global regulatory community, and we are confident that we would win in court,” Aon CEO Greg Case wrote in a letter sent to clients on Monday. “And while we requested an August 2021 trial, the current course with the DOJ would likely have taken us well into 2022.” 

The Department of Justice said that the deal would have combined the second and third largest insurance brokers in the world, “effectively consolidating the industry’s ‘Big Three’ into a Big Two.” 

According to Aon, that assessment is wrong: “The DOJ’s perspective demonstrates a misunderstanding of the marketplace and our combination was blocked by poor timing and factors ultimately outside our control,” the letter to clients said.   

“What we’re seeing is a throwback,” Weiner said. “Biden is indicating enforcement is going to be tougher than the country has seen since Reagan was president.” 

For financial services companies looking to merge, these regulatory moves could have a real impact in how they go about doing so.

According to Weiner, the Department of Justice and Federal Trade Commission have tended to be softer in how they approach antitrust enforcement than the court system, due to precedent set in the 1960s and 1970s that makes it difficult for companies to prevail.  

“What you may see in the next couple of years is that being turned on its head,” Weiner said. In his view, tougher enforcement from the DOJ and FTC may make companies more willing to go to court for a deal. But that won’t be easy.  

A court case can take a long time — 18 to 24 months, in some cases — which is a long time to hold together a deal. “It creates a tremendous amount of risk, particularly for the target company,” Weiner said. “Employees concerned about their careers may look to go other places.” 

What’s more, breakup fees could become a more common part of deal structures. Aon had to pay Willis Towers Watson a $1 billion termination fee for the deal, for example.  

According to Johnson, it’s hard to extrapolate too much on how the results of the Aon and Willis Towers Watson merger will affect antitrust litigation moving forward, though.  

“Antitrust is an area that is very factually specific,” Johnson said. “Every case depends on the critical details.” 

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