EU Regulator Clears Aon Merger With Willis

The European Commission said Aon had addressed its antitrust concerns over the insurance broker merger by agreeing to sell Willis Tower Watson assets.
Matthew HellerJuly 9, 2021

The European Commission has conditionally approved insurance broker Aon’s proposed $30 billion acquisition of Willis Towers Watson, citing Aon’s agreement to sell assets to address antitrust concerns.

According to Insurance Journal, the EU’s move lifts “a major roadblock” to the deal, which would combine two of the “Big Three” global insurance brokers, putting Aon ahead of industry leader Marsh & McLennan.

“This is a major step that demonstrates continued progress toward obtaining regulatory clearances for the proposed combination,” Aon and Willis said in a news release.

The commission said its approval was conditional on Aon implementing antitrust remedies, including the sale of Willis’s commercial risk brokerage and reinsurance businesses to rival Arthur J. Gallagher for $3.57 billion.

The remedy package “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,” Margrethe Vestager, the EU’s top antitrust official, said.

The merger, however, still faces other regulatory approvals, including in the U.S., where the Department of Justice last month filed an antitrust lawsuit alleging the deal threatens to eliminate competition, raise prices and reduce innovation.

The European Commission said it conducted an in-depth investigation that indicated the merger would have harmed competition in the markets for commercial risk brokerage services to large multinational customers based in Europe and for treaty and facultative reinsurance brokerage services.

European customers, the commission said, identified Gallagher, the next closest competitor to the “Big Three,” as the most suitable purchaser of the Willis assets and the commission has concluded that the merger, as modified by the divestitures, “would no longer raise competition concerns.”

In seeking U.S. approval, Aon has agreed to sell its U.S. retirement business to private investment firm Aquiline and its Retiree Health Exchange individual health insurance business to digital services firm Alight for a total of $1.4 billion.

But the DOJ said in its suit that the proposed sales “would not come close to fully maintaining the competition that would otherwise be lost as a result of the proposed merger.”