The U.S. Justice Department filed a lawsuit on Wednesday aimed at stopping insurance broker Aon’s (NYSE:AON) $30-billion acquisition of Willis Towers Watson (NASDAQ:WLTW) because it would reduce competition and could lead to higher prices.
The deal would combine two of the “Big Three” global insurance brokers, the department said. The third is Marsh McLennan (NYSE:MMC).
Aon and Willis, which was formed in a 2016 merger, put together insurance contracts for clients that involve a number of insurance providers, for coverage ranging from airlines to large sporting events.
The complaint cites an unnamed Aon executive who told colleagues, “We have more leverage than we think we do and will have even more when (the) Willis deal is closed. …. We operate in an oligopoly which not everyone understands.”
The complaint cites an unnamed Aon executive who told colleagues, “We have more leverage than we think we do and will have even more when (the) Willis deal is closed. …. We operate in an oligopoly which not everyone understands.”
The complaint, filed in the U.S. District Court for the District of Columbia, listed five areas of concern including identifying appropriate health benefits plans for big customers and plans for property, casualty, and financial risk for large customers.
In a joint statement, Aon and Willis said they disagreed with the Justice Department’s action, “which reflects a lack of understanding of our business, the clients we serve and the marketplaces in which we operate.”
AON shares dipped 63 cents to $243.47, while those for Willis sprinted $1.91 to $239.05.