Aon-Willis deal under review by Competition Bureau

Canada’s competition regulator is reviewing the proposed merger of global brokerages Aon plc and Willis Towers Watson plc, but the federal government is not saying whether it has actually received any complaints.

The US$30-billion deal, originally announced in March 2020, was approved by shareholders of Aon and Willis Towers Watson in August 2020. If completed, the deal would form the world’s largest commercial property and casualty insurance brokerage. Marsh & McLennan Companies is the biggest brokerage worldwide at the moment, thanks in part to Marsh acquiring Jardine Lloyd Thompson in 2018.

Willis Towers Watson and Aon cannot actually operate together until the deal closes, Aon CEO Greg Case said this past February during a conference call discussing Aon’s 2020 financial results.

The United States justice department asked a U.S. court in mid-June to block the deal. Both Aon and Willis are headquartered in Dublin, with major executive offices in London. Both are traded on the New York Stock Exchange. The deal is still conditional upon approval from competition regulators in several jurisdictions, including Canada.

A spokesperson for Canada’s Competition Bureau confirmed last week to Canadian Underwriter that it is reviewing Aon’s proposed acquisition of Willis Towers Watson.

“Under the Competition Act, mergers of all sizes and in all sectors of the economy are subject to review by the Commissioner of Competition to determine whether they will likely result in a substantial lessening or prevention of competition in any market in Canada,” the spokesperson told Canadian Underwriter.

Earlier this year, the Competition Bureau approved Intact Financial Corp.’s acquisition of certain assets of RSA plc, including RSA Canada.

Regarding the Aon-Willis deal, the Competition Bureau spokesperson told Canadian Underwriter he cannot confirm whether anyone has complained to the bureau because its work is confidential. The bureau would only be able to confirm the existence of a complaint under specific circumstances – for example, if another party made the complaint public or if it was made public in court records.

South of the border, the U.S. justice department is asking the U.S. District Court for the District of Columbia to declare that a combination of Aon with Willis would violate Section 7 of the Clayton Act. That American law prohibits mergers and acquisitions when the effect “may be substantially to lessen competition, or to tend to create a monopoly.”

For its part, Aon argues that the U.S. DoJ’s civil lawsuit reflects a lack of understanding of Aon’s business, the clients Aon serves, and the marketplaces in which Aon operates.

The U.S. justice department alleged in its court filing that Marsh, Aon, and Willis Towers Watson “dominate competition for insurance broking for the largest companies in the United States, almost all of which are customers of at least one of them.”

To alleviate anti-trust concerns, Willis Towers Watson announced May 12 that it would sell several of it major operations to Gallagher for US$3.57 billion.

Separately, A.M. Best Company Inc. reported July 1 that Marsh, Aon, Willis, and Gallagher are the Top 4 brokerages worldwide, respectively, when measured by revenue in 2020.

If Willis’s asset sale to Gallagher closes, Gallagher would acquire from Willis a P&C brokerage business from predominantly middle-market and large-account clients located in select markets such as San Francisco, Houston, and Bermuda, across niches such as construction and energy. Gallagher would also get all of Willis Re’s reinsurance brokerage operations; certain retail brokerage operations in  Germany, Netherlands, Spain, and France; and cyber, space and aerospace products in Britain.

Feature image via iStock.com/Colin Temple