Aon’s $ 30 billion bid for Willis Towers Watson to create the world’s largest insurance brokerage faces a five-month investigation after EU antitrust regulators expressed concerns that the deal could hurt competition in major markets.
The merger of the second and third largest brokerage firms in the world would surpass Marsh & McLennan Companies Inc.’s first global position.
The pandemic caused a sharp increase in insurance claims, in addition to other challenges, such as climate change, and affected their investment portfolios.
Falling valuations and companies looking to strengthen business models, in turn, have generated a number of businesses across the insurance industry.
Aon said it is confident of obtaining EU approval without having to sell any assets to allay competition concerns and is on track to close the deal in the first half of 2021.
The European Commission said the deal could significantly reduce competition in the markets for commercial risk brokerage services, reinsurance brokerage and the provision of retirement and health and wellness services to commercial clients.
He cited brokerage services for large multinational clients in properties and accidents, financial and professional, credit and political, cyber and maritime risk, as well as clients in the space and aerospace manufacturing industry as the most affected.
EU research will also examine the provision of reinsurance brokerage services and the provision of retirement and health and wellness services. The EU’s competition official has set a date of 10 May for his decision.
Reuters had reported on December 15 that the EU’s competition officer would open an in-depth investigation into the deal after Aon refused to offer concessions to address EU competition concerns.
EU Commission Executive Vice President Margrethe Vestager, responsible for competition policy, said: “Aon and Willis Towers Watson are two leading companies in the insurance and reinsurance brokerage market. They help companies with their risk management and find the right insurers for their needs. We opened an in-depth investigation to carefully assess whether the transaction could lead to negative effects on competition, less choice and higher prices for European clients in the commercial risk brokerage market. “