The Justice Department’s Antitrust Division has sued to block American Express GBT’s proposed $570 million acquisition of CWT, saying that combining the travel management companies would harm competition for business travel services among multinational clients.

The lawsuit contends that Amex GBT, CWT and their investors were aware that combining the TMCs would reduce competition.  

The lawsuit identifies Amex GBT, CWT and BCD Travel as the three largest companies competing to serve multinational corporations. Smaller TMCs like Flight Centre Travel Group and Corporate Travel Management “do serve some global and multinational customers,” the suit said, “but none have the available scale and capacity to replace the competition that CWT provides.”

On Travel Weekly’s Power List of the largest U.S. travel agencies, Amex GBT, BCD Travel and CWT are third, fourth and fifth, respectively. Flight Centre is sixth and Corporate Travel Management is ninth.

In a statement responding to the lawsuit, Amex GBT said, “We are disappointed by the DOJ’s legal action aimed at blocking the proposed transaction between Amex GBT and CWT and refute DOJ’s assertion that the proposed transaction would harm large customers. We firmly believe that the proposed transaction would bring significant benefits to all business travel customers, suppliers and employees.”  

Multinational companies typically spend over $100 million per year on travel, the lawsuit states, and bidding data shows that that Amex GBT, CWT and BCD Travel are the primary competitors for these customers.

Demonstrating that Amex GBT and CWT knew that their combination would reduce competition, the DOJ said that in November 2021, an Amex GBT investor “noted that Amex GBT primarily competes against CWT and BCD Travel for larger, multinational customers.” 

Similarly, in a May 2022 memo describing its investment thesis in CWT, Redwood Capital Management explained that CWT “is one of the three largest corporate travel management companies globally and operates in a concentrated industry with the top three players controlling greater than 70% of large enterprise travel,” the lawsuit says. 

Amex GBT says DOJ is off the mark

Amex GBT contends that the DOJ is taking an “intensely narrow view of competition.”

“Rather than account for how the business travel industry looks today, the DOJ’s complaint takes a backward-looking view of the market and fails to recognize that the travel industry has transformed dramatically since the pandemic,” Amex GBT said in a statement. “Accordingly, the complaint presents a distorted view of the marketplace and attempts to support that view with factually incorrect statements and out-of-context snippets. A full review of all of the evidence submitted would support Amex GBT’s unambiguous commitment to customer choice, value, experience and innovation. The complaint completely disregards the emergence of numerous significant competitors in the business travel management industry and takes an intensely narrow view of competition. 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.”

The DOJ described the competition for customers between Amex GBT and CWT as “fierce” and said combining the TMCs would “risk higher prices, fewer choices and less innovation, thereby threatening harm to scores of businesses crucial to the U.S. economy.”

Whether the incoming Trump administration will agree with the Biden DOJ’s assessment is another matter. According to a Bloomberg Law report, the Justice Department under Biden had nine active civil antitrust cases and that “top Biden antitrust enforcers say their work inside the courtroom laid a foundation with sticking power for wielding century-old competition laws to police corporate concentration at scale.”