Will we one day see a merger between the two mega-TMCs that are American Express GBT and CWT ? Nothing is less certain after reading the provisional report published on 6 November by the UK's Competition and Markets Authority (CMA). For several weeks, the CMA has been scrutinising the potential consequences of such a merger, which would lead to the emergence of a business travel behemoth, and therefore a much weaker competitive environment. Especially asThis is not Amex GBT's first acquisition...
The UK authorities are particularly concerned about key accounts and the choices they would be offered in a post-merger world. As Martin Coleman, chairman of the enquiry group, sums up: "We have provisionally found that only a small number of corporate travel agencies are considered capable of meeting the needs of larger companies, and this agreement could reduce competition and increase costs.". The CMA goes into more detail, citing two criteria to define the companies concerned: travel budgets in excess of 25 million dollars, with requirements covering several distinct regions of the globe.
A combined market share of 60 to 70%
The CMA has made its calculations. And it has to be said that the status of this future giant would leave little room for manoeuvre for the major accounts. "We have calculated the shares of supply on the basis of the TTV generated in the UK in 2023 by customers with an aggregate TTV of more than $25 million. We have provisionally found that the parties' combined share of supply in the UK on this basis is 60-70 %" .
When the UK's Competition and Markets Authority first expressed doubts, American GBT provided a (lengthy) reasoned response. It was an interesting exercise in style, since the TMC had to emphasise the power, quality and expertise of its direct competitors... which would guarantee a healthy, competitive market. Once again, Amex GBT took up the pen to express its "fundamental disagreement" with the CMA's report.
Eric J. Bock, Legal Director and Global Head of Mergers and Acquisitions at Amex GBT, comments: "We are very proud of the work we have done with Amex GBT. We are disappointed with the CMA's interim report. The CMA did not appreciate the evidence which reflects the breadth of the business travel sector and its dynamic and competitive nature. In recent years, many travel management companies have expanded their offerings, while others have entered the sector and are rapidly expanding their businesses. We are carefully reviewing the interim report and will respond to the CMA's concerns. We are convinced that the proposed transaction would bring many benefits to customers and suppliers and that the business travel sector would remain highly competitive. We will continue our dialogue with the CMA to demonstrate that its concerns are not justified. ".
This dialogue should continue fairly quickly, insofar as the CMA is inviting the protagonists to submit their observations before 27 November. As for Amex GBT, it still intends to close the deal during the first quarter 2025.
