The European Commission has conditionally approved Aon’s acquisition of Willis Towers Watson (WTW) under the EU Merger Regulation.
As a provider of captive, reinsurance and underwriting solutions, Aon announced the merger of alternative risk manager and reinsurance brokerage WTW in March 2020.
The Commission’s investigation has been underway since December 2020.
Approval is conditional upon full compliance with a series of commitments offered by Aon, including partial divestment of WTW’s business to Arthur J. Gallagher, allowing the international brokerage to strengthen its reinsurance and commercial risk capabilities as a credible alternative to the combined company post-acquisition.
Gallagher will receive, among others, WTW’s entire commercial risk brokerage country organisations in France, Spain, Germany and the Netherlands, as well as its cyber risk business in the UK and the entire global treaty reinsurance brokerage, Willis Re.
Gallagher was selected to receive the divestment business following a market test in which European customers identified the brokerage to be the next closest competitor to the ‘Big Three’.
The divestment decision follows a detailed market investigation by the Commission into the potential consequences and effects of the proposed acquisition, which raised concern that competition would be harmed in the provision of commercial risk brokerage services to large multinational customers, particularly those based in Europe.
The investigation noted that the risk classes of property and casualty, financial and professional services, space and aerospace, and cyber would be particularly damaged, as well as the national markets of the Netherlands and Spain.
There was also concern over the provision of treaty and facultative reinsurance brokerage services, as well as pension administration services.
Margrethe Vestager, executive vice president in charge of competition policy, explains: “The remedy package accepted by the Commission ensures that European companies, including insurance companies and large multinational customers, will continue to have a good choice and good services when selecting a broker suitable for their needs.”
The Commission concluded that, providing the transaction between Aon and WTW was modified by the commitments, there would no longer be concerns over competition. The acquisition will be permitted to go ahead following the commission’s formal assessment and approval of Gallagher as a “suitable purchaser” of the divestment business.
