Justice Department Sues to Block Aon Acquisition of Willis Towers Watson

The lawsuit marks the Justice Department’s first major antitrust action during the Biden administration, though it has been investigating the deal for more than a year.

“American companies and consumers rely on competition between Aon and Willis Towers Watson to lower prices for crucial services, such as health and retirement benefits consulting,” Attorney General Merrick Garland said. “Allowing Aon and Willis Towers Watson to merge would reduce that vital competition and leave American customers with fewer choices, higher prices and lower quality services.”

A spokesman for Willis Towers declined to comment. A spokesman for Aon said the company had no immediate comment.

Aon and Willis Towers, both registered in Ireland, are two of the world’s biggest insurance brokerages by revenue, alongside New York-based Marsh & McLennan Cos.

In March 2020, Aon and Willis Towers announced their deal, which would create a giant with total annual revenue of more $20 billion, compared with Marsh & McLennan’s $17.2 billion. The brokerages help companies buy insurance and advise them on risk management.

Aon also is a major consultant to businesses on health and other benefit packages for their employees.

Currently, Aon, Willis Towers and Marsh & McLennan each have the global reach and diversity of products to offer a one-stop shop of broker services that many companies operating internationally rely on to buy insurance.

Aon and Willis Towers have aggressively sold off assets in recent weeks to smaller rivals to create new and larger competitors, in a bid to appease regulatory concerns over competition in the U.S., the European Union and Asia. Some analysts have said these deals could be seen by regulators as too small to make a meaningful difference in the ability of buyers of the assets to rival a combined Aon-Willis Towers and Marsh & McLennan globally on price.

The Justice Department in its lawsuit argued the companies’ divestitures fell far short of what is needed to address the harms posed by the merger.

Career Justice Department staff have been investigating the transaction and its potential impact, as is typical in merger cases. President Biden hasn’t yet nominated a political official to lead the department’s antitrust division, but its work has continued steadily during the transition between administrations.

Antitrust officials with the European Commission, the EU’s executive body, also have expressed concerns that the merger, if left unchecked, could narrow customer choice and give the combined entity too much sway over the prices that clients have to pay for financial protection against property and casualty damages, trade tensions and cybercrime.

The European Commission is expected to make its decision on whether to approve the merger by Aug. 3.

Failure to complete the deal would put at risk the financial advantages the two companies expected to gain from it. Aon and Willis Towers said the acquisition would generate annual cost savings of $800 million and boost revenue through the sale of new products to help clients manage risks in connection with areas including climate change and intellectual property.

In early June, Aon Chief Executive Greg Case announced additional divestitures that the company said were intended to address questions raised by the Justice Department, and he expressed confidence the deal would be wrapped up. “These agreements further accelerate our momentum to close our proposed combination with Willis Towers Watson,” he said at the time.

While the timing of the transaction’s close has remained uncertain, numerous Wall Street analysts have considered the deal on track though possibly requiring more divestitures related to antitrust concerns.

—Leslie Scism contributed to this article.

Write to Brent Kendall at [email protected] and Ben Dummett at [email protected]