American Express Global Business Travel and CWT’s joint response to the CMA’s interim report was made public today, with the parties criticising both the regulator’s findings and its processes.

The 70-pages-long response was submitted on 27 November following publication of the Competition and Markets Authority’s phase 2 report on 7 November as part of its ongoing investigation into Amex GBT’s planned $570 million acquisition of CWT.

In the parties’ latest objections to the CMA’s finding, the TMCs reiterate their view that the acquisition will not result in a substantial lessening of competition (SLC) in the UK or elsewhere and criticises its focus on and definition of global multinational customers (GMNs), which the CMA suggests can be served by only three TMCs: Amex GBT, CWT and BCD Travel.

The Amex GBT-CWT response says: “It [the CMA] contends as a result that CWT and BCD are the closest competitors to GBT and that other TMCs do not exert a significant competitive constraint on GBT. This is incorrect and is not supported by the evidence, which shows that at least FCM, Navan, CTM, Spotnana/Direct Travel, Kayak for Business/Blockskye, ATPI, TAG, TravelPerk, and Trip, and others, have all the capabilities that the IR [interim report] identifies as important for GMNs, including those at the supposed ‘higher end’ of customer spend, and compete closely with GBT.”

The TMCs also highlight the CMA’s definition of and focus on GMNs, with the parties arguing they do not constitute a distinct market with unique requirements and that their needs are substantially similar to those of SMEs. The CMA defines GMNs as companies with more than $25 million annual total transaction value.

“The IR has adopted a fundamentally erroneous market definition, having defined a market for GMN customers that does not exist in reality, which is based on a limited and unrepresentative sample of unsubstantiated and misinformed views about different customers’ requirements.

“This error has been compounded by the IR’s exclusion from this artificial ‘GMN market’ of hundreds of GMN customers with the same requirements served by many different TMCs.”

It adds: “Customers have a spectrum of travel requirements. But they are, in essence, substantially similar. It is impossible to determine a customers’ travel spend from its requirements alone, or vice-versa.”

The response also criticises the CMA’s methodology and its reliance on a limited and unrepresentative customer survey sample – some 90 of the TMCs’ customers. The TMCs’ rebuttal also claims the CMA’s survey included ambiguous, leading questions, and inadequate statistical significance, violating the CMA’s own guidelines.

To substantiate its argument, Amex GBT commissioned its own independent survey in November of more than 1,500 customers – 765 of whom are GMNs and a further 765 SMEs – and the results of which, it claims, “are more comprehensive and robust than the CMA’s results”.

“The independent survey results show that both GMNs and SMEs consider the same core TMC features and value each of them in a similar way,” the TMC said.

Amex GBT also attests that its survey sample of GMN customers “is more than 12 times larger than the CMA’s sample and
over 60 times the CMA’s sample when focusing only on GMNs that have recently
tested the market”, which the TMC defines as those that have tendered for TMC services in the last two years.  

Another key contention is the “backward-looking nature of the IR’s approach” which is evidenced by its focus on offline servicing. “The IR’s assessment of the transaction through the rear-view mirror misses that business travel – like many industries – is in the midst of a technological, AI-accelerated transformation. The vast majority of services to GMNs and SMEs are already provided online and are increasingly going touchless.”

It adds: “The market of today and the one of tomorrow looks nothing like the pre-Covid or even 2021-2022 landscape captured in the IR.”

The response additionally claims the CMA has overlooked the fact that GMN customers can and frequently do switch between TMCs to get better terms or extract more value. “Changing TMC is straightforward and inexpensive relative to the value that can be unlocked from switching to a new provider. And this possibility represents a significant constraint on TMCs,” it says.

“The idea that the transaction may enable GBT to raise prices or reduce quality to GMNs, or further still the highest spending group of GMNs, is impossible to comprehend.”

The publication of the TMCs’ response comes a day after speculation emerged over a possible DOJ lawsuit to challenge the merger in the US.