The decision appears to have been prompted by what Aon chief executive Greg Case calls a “stalemate with the US Department of Justice.”
In what has quickly become one of the industry’s largest and most talked about stories, the chances of these two brokerage heavyweights actually succeeding in securing the various regulatory approvals have appeared in a constant state of flux.
Only a few weeks ago, the European Commission gave the green light to the merger, albeit dependent on full compliance with a substantial set of commitments offered by Aon, including the cession of central parts of WTW’s business to the rival player. Gallagher.
The move prompted a joint statement from Aon and WTW on July 9, describing the approval as an “important step” in the merger.
Things seemed to be picking up steam when New Zealand regulators on July 12 paved the way for approval of the deal in the region. However, this path, just like that traced by the EC, was a path requiring a multitude of concessions aimed at ensuring a competitive environment.
Ultimately, it appears that the demise of this mega-merger was met by the US Department of Justice (DOJ), which decided in June to block the deal.
The complaint filed by the DOJ indicated that Aon and WTW operate in an oligopoly and that by teaming up they would have even greater leverage to raise prices and lower the quality of services that thousands of people rely on. American companies, as well as their customers, employees and retirees.
In today’s statement, Case chastises such claims by emphasizing the belief that the DOJ’s position overlooked the ways in which the complementary activities of the two brokers operate in a broad competitive area of the economy.
“We are confident that the combination would have accelerated our joint ability to innovate on behalf of clients, but the inability to achieve expedited dispute resolution has brought us to this point,” said Case.
As part of the termination of the business combination agreement, Aon will pay the $ 1 billion termination fee to WTW, whose proposed plan of arrangement is now lapsed, allowing the two organizations to move forward. ‘before independently.