The Department of Justice’s assertion that American Express Global Business Travel’s planned acquisition of CWT would diminish competition among the largest travel management companies (TMCs) is without merit, according to travel industry attorneys who spoke to Travel Weekly. 

The DOJ’s Antitrust Division on Jan. 10 filed a lawsuit to block the proposed $570 million acquisition that would see the country’s largest travel management company merge with a close competitor. Amex GBT sits at No. 3 on Travel Weekly’s Power List, just below online travel agencies Booking Holdings and Expedia Group. CWT is at No. 5, behind BCD Travel.

In the lawsuit, the DOJ argued that the acquisition would stifle competition among the largest TMCs that have global and multinational clients by eliminating one of the three largest players in that market. The lawsuit segments the TMC business into two main areas: global/multinational clients and small-to-medium enterprises. And it says the global/multinational segment is where competition would be affected.

Additionally, the lawsuit states that the transaction would eliminate competition between Amex GBT and CWT, reducing corporations’ choice in TMCs and risking higher prices and less innovation.

Mark Pestronk, a travel industry attorney and Travel Weekly columnist, said the DOJ’s segmentation of TMC business into multinational clients and small-to-medium enterprises is flawed.

“In corporate travel, there are no distinct markets,” Pestronk said. “There is no ‘large enterprise’ travel market. There is no ‘small to medium enterprise’ travel market. It is all the same market because the needs of large customers are about the same as the needs of small-to-medium customers.”

Further, Pestronk said that all TMCs provide services to large and small customers, meaning there is no distinct type of TMC. In addition, he said that if the largest TMCs — Amex GBT, BCD and CWT — didn’t exist, other TMCs would be able to fill the needs of corporate clients.

A statement issued by Amex GBT in response to the lawsuit makes a similar argument.

“The complaint completely disregards the emergence of numerous and significant competitors in the business travel management industry and takes an intensely narrow view of competition,” Amex GBT said. “In addition, the DOJ’s focus on only the largest and most powerful customers headquartered in the U.S. that represent less than 3% of the global business travel market is unwarranted and unsupported by legal precedent.”

Watching out for the big guys?

Travel industry attorney Jeffrey Ment also said the DOJ’s case lacked merit, as it was unlikely the DOJ would be able to prove that consumers would suffer as a result of the transaction. 

Ment wasn’t surprised the lawsuit was filed, considering the department’s other antitrust cases over the past few years, notably those against American Airlines and JetBlue’s Northeast Alliance and the proposed merger of Spirit Airlines and JetBlue. But those cases sought to eliminate ultimate harm to consumers, Ment said.

Jeffrey Ment

“Here, they seem to be worried about corporate America, and the big giant corporations are going to have fewer companies to choose from,” Ment said. “The fact of the matter is that giant corporations could do travel all by themselves if they had to.”

Most do not, he said. They are drawn to TMCs due to the better rates they get and their relationships in the travel industry.

“This was different than the usual antitrust case that’s so worried about the little guy on the street who’s going to have to pay more or lose airline service from a city,” he said. “Here they’re complaining that some of the biggest companies in the world, that spend the most money in the world, are going to have fewer competitors to choose from.”

Deal faces U.K. scrutiny

The proposed acquisition also faces scrutiny in the U.K., where the Competition and Markets Authority has an open case on the transaction. On Jan. 16, the competition authority extended by six weeks to March 9 its deadline to make a final decision on the proposed acquisition.

In its interim report issued in November, the authority found that if the acquisition goes forward as planned, it “may be expected to result in a substantial lessening of competition in the global market for the supply of business travel agency services to customers with high total travel spend (of over $25 million) and requirements spanning multiple distinct regions of the globe.”