The United Kingdom’s Competition and Markets Authority (CMA) has approved the proposed merger of American Express Global Business Travel Group (Amex GBT) and Carlson Wagonlit Travel (CWT Holdings LLC), a global travel and meetings solutions provider. Approved by the CMA on March 6, the deal is valued at $540 million, a $30 million decrease from earlier valuations.

But with continuing pressure from the Department of Justice Antitrust Division, Amex GBT postponed the merger until the end of the year. A carry-over from the Biden administration, the DOJ sued to block the deal because it would stifle competition in the corporate travel management sector.

Amex GBT has called DOJ’s claims unfounded, saying the merger would actually enhance service offerings, benefiting customers, suppliers, and employees. Chief Legal Officer Eric J. Bock says the CMA has validated its view that the DOJ ignores the many significant competitors in business travel. American Express, the credit card company, divested its corporate travel business in 2014 for $900 million. Those assets became Amex GBT, which has since made nine acquisitions, hoping to make CWT its tenth.

The Market

Global

Amex GBT is the largest provider of business travel management services in the world. It managed $28 billion in business travel transactions in 2023 and generated $2 billion in revenue. It claims a 40% share of the market $60 billion market. The company boasts a workforce of more than18,000 employees in more than 145 countries.

CWT is reportedly the third-largest provider of business travel management services in the world. It was expected to manage $14 billion in business travel transactions in 2024, with projected revenues of $850 million.

BCD Travel is second behind Amex GBT and competes for corporate customers that spend significantly on travel. It operates in more than 109 countries. According to its latest report, BCD generates $24.6 billion in sales.

Smaller competitors include Corporate Travel Management and FCM Travel.

Europe

In European markets, Amex GBT generates $10.8 billion, BCD Travel $6.1 billion, CWT $4.8 billion, Navan Group $3.8 billion, FCM Travel $3 billion, Viajes El Corte Inglés $1.8 billion, Corporate Travel Management $1.4 billion, and TravelPerk $1.1 billion.

North America

BCD is the top competitor to Amex GBT and CWT, and outperforms both with large corporate clients. BCD serves 35 of the 100 largest companies, while Amex GBT serves 29 and CWT serves 12.

CMA and DOJ

The CMA and the Antitrust Division share objectives, but their decisions on specific mergers can diverge based on their different legal frameworks and economic perspectives.

In the past five years, the only other disagreement between the two authorities also took place in the travel sector. Sabre Corporation, a leading travel technology and services provider, aimed to acquire Farelogix, a company known for its innovative airline commerce solutions. The CMA blocked the merger, citing concerns over reduced competition and potential harm to consumers. Conversely, the DOJ did not block the merger, but Sabre had to abandon its plans due to these conflicting decisions.

The CMA and DOJ were in sync in approving two noteworthy mergers in the tech industry.

• In 2020, both authorities scrutinized the proposed acquisition of Fitbit by Google. After thorough investigations, the merger was approved with conditions aimed at safeguarding consumer data privacy and ensuring fair competition in the health and wearable technology sectors.
• In 2016, both agencies approved Microsoft’s acquisition of LinkedIn. The approval came after Microsoft’s commitment to stringent measures ensuring that LinkedIn’s data would remain accessible to third-party platforms and competitors. Data accessibility has been a key sticking point in mergers of companies, like Microsoft, Google, Meta, Amazon, and others, that accumulate vast quantities of consumer information.

The divergences in decisions between the UK CMA and US DOJ can be attributed to differences in legal frameworks, market dynamics, economic considerations, and political priorities. Understanding these dynamics is essential for businesses navigating mergers and acquisitions in a global context.

European Commission

The European Union, meanwhile, has not publicly signaled any serious concerns about the merger. Where the DOJ and CMA have stringent antitrust laws that focus on preventing monopolistic practices and ensuring competitive markets, the EU’s regulatory framework, governed by the European Commission, tends to be more lenient about consolidation, especially when the entities involved do not directly threaten market competition on a large scale.

Market dynamics and the perceived impact on competition and consumers vary between these regions, too. Despite it being in a fragmented market, the DOJ has continued its opposition, while the CMA is fine with it, and the EC has not shared any concerns, either. While it is pure speculation, the EC might view the merger as a way to strengthen the global competitiveness of European businesses without substantial adverse effects on the local market.

Travel Industry Mergers

Perhaps another reason for increased scrutiny in the U.S. is the wave of intense consolidation of various markets, including the travel sector.

The merger of American Airlines and U.S. Airways in 2013 created one of the largest airlines in the world, but led to reduced competition on some routes, resulting in higher fares and fewer choices for passengers. The merger also contributed to increased baggage fees and other ancillary charges, making travel more expensive. That was just one merger that contributed to the consolidation of an industry that comprised 10 major companies in 1980 and only five today.

The merger between Travelport and Worldspan in 2007 also had mixed outcomes for consumers. Travelport is a global travel commerce platform providing distribution, technology, payment, and other solutions for the travel and tourism industry. Worldspan was a global distribution system (GDS) provider offering electronic distribution of travel information and services, including airline fares, hotel rates, and car rental prices, to travel agents and corporations. While the merger was designed to create a more robust GDS, some travel agencies argued that the merger reduced the competition among GDS providers, leading to higher fees for accessing booking systems. This increase in operational costs was often passed on to travelers, manifesting as elevated ticket prices and booking charges.

Amex GBT a Frequent Buyer

Since it was established in 2014 when American Express divested its corporate travel division, Amex GBT has kept a busy deal calendar. According to information on the company’s website, it acquired the following:

• KDS (August 2016): Acquired for its cloud-based technology that streamlines corporate travel and expense management.
• SMT Travel Agency (May 2016): Acquired to enhance Amex GBT’s travel management services with a focus on quality and personalized service.
• Banks Sadler (June 2017): Acquired for its expertise in event management and venue sourcing, strengthening Amex GBT’s Meetings & Events division.
• Hogg Robinson Group (February 2018): Acquired to expand Amex GBT’s global footprint and enhance its technology and service offerings.
• Kanoo Travel (August 2019): Acquired to bolster Amex GBT’s presence in the Middle East and provide better service to regional clients.
• DER Business Travel (June 2019): Acquired to integrate its services into Amex GBT’s portfolio, focusing on business travel management in Germany.
• 30SecondsToFly (October 2020): Acquired for its AI-driven chatbot technology that enhances digital customer engagement and support.
• Ovation (January 2021): Acquired to strengthen Amex GBT’s presence in the high-touch, high-service travel management sector.
• Egencia (May 2021): Acquired to merge its technology and service capabilities with Amex GBT, creating a more comprehensive travel management solution.
• CWT (December 2022): This pending acquisition is intended to enhance Amex GBT’s capabilities in travel management and global corporate travel solutions, expanding their market reach and service offerings.

Conclusion

The Amex GBT and CWT merger illustrates how complex factors play into regulatory and enforcement alignment and divergence. While the deal has been approved in the UK and apparently hasn’t raised European eyebrows, concerns about the competitive landscape in the travel industry generally may be valid in the U.S. where today there are five major airlines, half of what operated in 1980, and many other market segments have experienced significant consolidation, e.g., telecommunications; banking; media and entertainment; and healthcare.