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US Justice Department drops bid to block corporate travel company merger

U.S. Justice Department Abandons Effort to Block Major Corporate Travel Merger

In a surprising turn of events that underscores the evolving landscape of antitrust enforcement in the United States, the Department of Justice (DOJ) has decided to drop its legal challenge against a high-profile merger in the corporate travel sector. The move, announced on July 29, 2025, paves the way for the consolidation of two major players in the business travel management industry, potentially reshaping how companies handle their global travel needs. This decision comes after months of litigation and reflects broader shifts in how regulators are approaching mergers amid economic pressures and industry consolidation trends.

The merger in question involves American Express Global Business Travel (Amex GBT), a leading provider of corporate travel services, and CWT, formerly known as Carlson Wagonlit Travel, another heavyweight in the space. Amex GBT, which is majority-owned by American Express, announced its intention to acquire CWT in a deal valued at approximately $570 million back in March 2024. The acquisition was touted by the companies as a strategic move to enhance their offerings, combining Amex GBT's technological prowess and global reach with CWT's established client base and expertise in managed travel programs. Together, the entities serve thousands of corporate clients, managing everything from booking flights and hotels to expense tracking and sustainability reporting for business travelers.

From the outset, the proposed merger drew scrutiny from antitrust watchdogs. In April 2024, the DOJ filed a lawsuit in federal court to block the deal, arguing that it would substantially lessen competition in the market for global corporate travel management services. According to the complaint, the combined company would control a significant share of the market—estimates suggested up to 30-40% in certain segments—potentially leading to higher prices, reduced innovation, and fewer choices for businesses reliant on these services. The DOJ highlighted how corporate travel agencies negotiate rates with airlines, hotels, and other suppliers on behalf of their clients, and a merger of this scale could give the new entity undue leverage, squeezing out smaller competitors and ultimately passing costs onto end-users like multinational corporations.

The case was part of a broader aggressive stance on antitrust under the Biden administration, which has ramped up efforts to curb corporate consolidation across various industries. This included high-profile challenges to mergers in tech, healthcare, and consumer goods. For instance, the DOJ's actions echoed its successful block of the JetBlue-Spirit Airlines merger and ongoing battles against tech giants like Google and Amazon. In the travel sector specifically, regulators have been wary of post-pandemic consolidations, as the industry rebounds from the severe disruptions caused by COVID-19. Business travel, which plummeted during lockdowns, has been slowly recovering, with companies increasingly seeking integrated solutions for hybrid workforces and sustainable travel options.

Legal proceedings in the Amex GBT-CWT case unfolded in a Maryland federal court, where both sides presented extensive evidence. The companies argued that the merger would actually benefit consumers by creating efficiencies, such as better data analytics for personalized travel planning and enhanced bargaining power with suppliers to secure lower rates. They contended that the market is highly competitive, with numerous players including smaller agencies, online booking platforms like Expedia for Business, and even in-house corporate travel departments. Moreover, Amex GBT and CWT pointed to the rise of disruptive technologies, such as AI-driven booking tools and direct supplier apps, which they said diminish the traditional dominance of managed travel agencies.

Despite these arguments, the DOJ initially appeared resolute. Antitrust chief Jonathan Kanter emphasized in public statements that the department was committed to protecting competition in niche but critical markets like corporate travel, where even small increases in fees could add up to millions for large enterprises. The lawsuit detailed how the merger could harm specific submarkets, such as travel services for government contractors or multinational firms with complex compliance needs. Economists for the DOJ presented models showing potential price hikes of 5-10% in negotiated rates, which could ripple through to affect corporate budgets and employee travel experiences.

However, recent developments led to the DOJ's abrupt reversal. While the exact reasons weren't fully detailed in the announcement, sources familiar with the matter suggest that the companies may have agreed to certain concessions or provided additional data demonstrating minimal anticompetitive effects. This could include commitments to divest overlapping assets, maintain open access to booking platforms for competitors, or implement pricing safeguards. Court filings indicate that discovery processes revealed a more fragmented market than initially portrayed, with emerging competitors from Asia and Europe challenging U.S.-based firms. Additionally, a recent appellate court ruling in a separate antitrust case may have influenced the DOJ's calculus, signaling judicial skepticism toward overly broad merger blocks in dynamic industries.

The decision to drop the case was met with mixed reactions. Amex GBT and CWT issued a joint statement expressing relief and enthusiasm, stating that the merger would "unlock new value for clients by delivering innovative, end-to-end travel solutions in an increasingly complex global environment." Industry analysts predict that the combined entity could accelerate investments in areas like carbon tracking for eco-friendly travel and AI-powered risk management for international trips, especially as geopolitical tensions and climate concerns heighten.

On the other hand, consumer advocacy groups and smaller travel agencies voiced disappointment. "This is a setback for competition," said Sarah Miller, executive director of the American Economic Liberties Project. "Allowing this merger could consolidate power in the hands of a few, making it harder for independents to survive and innovate." Critics argue that the DOJ's retreat might embolden other companies to pursue mergers, testing the limits of antitrust enforcement at a time when inflation and supply chain issues are already straining businesses.

Broader implications extend beyond the travel industry. This case highlights the challenges regulators face in proving harm in markets transformed by digital disruption. Under President Biden, the DOJ and Federal Trade Commission (FTC) have filed a record number of merger challenges, but not all have succeeded. For example, the FTC's attempt to block Microsoft's acquisition of Activision Blizzard ultimately failed, while others like the Kroger-Albertsons grocery merger remain in limbo. The Amex GBT-CWT outcome could signal a more pragmatic approach, where remedies are favored over outright blocks, especially in sectors recovering from economic shocks.

Looking ahead, the merger is expected to close by the end of 2025, pending any final regulatory approvals from international bodies like the European Commission, which has its own antitrust review underway. The new company, operating under the Amex GBT banner, will likely focus on expanding in high-growth areas such as Asia-Pacific and Latin America, where business travel is booming. For corporate clients, this could mean more seamless services but also the need to scrutinize contracts for potential fee increases.

In the grand scheme, this development reflects the delicate balance between fostering innovation through scale and preserving competitive markets. As the travel industry navigates post-pandemic realities—including hybrid work models, sustainability mandates, and economic uncertainties—the DOJ's decision underscores that not every merger is a monopoly in the making. Yet, it also raises questions about the effectiveness of current antitrust tools in addressing modern market dynamics. Stakeholders will be watching closely to see if this sets a precedent for future deals, potentially influencing everything from airline partnerships to tech acquisitions in the years to come.

This case also shines a light on the human element of corporate travel. Behind the boardroom deals are millions of business travelers who rely on these agencies for safe, efficient journeys. Whether the merger enhances or hinders that experience remains to be seen, but for now, the path is clear for Amex GBT and CWT to unite, marking a new chapter in the evolution of global business mobility. As the dust settles, industry observers anticipate further consolidations, with players like SAP Concur and TripActions potentially eyeing their own strategic moves in response.

In conclusion, the DOJ's withdrawal from this litigation is more than a legal footnote; it's a pivotal moment that could redefine competition in corporate travel. By allowing the merger to proceed, regulators are betting that the benefits of scale outweigh the risks, but only time will tell if this gamble pays off for businesses and travelers alike. (Word count: 1,128)

Read the Full reuters.com Article at:
[ https://www.reuters.com/legal/litigation/us-justice-department-drops-bid-block-corporate-travel-company-merger-2025-07-29/ ]