CMA highlights concerns in travel merger

The UK’s Competition and Markets Authority (CMA) has issued an interim report expressing significant concerns over the proposed merger between Global Business Travel Group (GBT) and CWT Holdings LLC (CWT). Both companies are among the largest corporate travel management providers globally, and the CMA’s provisional findings suggest that the merger could substantially reduce competition, potentially leading to higher prices and fewer choices for businesses that rely on global travel services.

The CMA’s Phase 2 report marks the first under its newly streamlined merger investigation process, aimed at enhancing engagement between merging companies and the CMA inquiry group to expedite decision-making and improve transparency. Martin Coleman, chair of the inquiry group overseeing the investigation, emphasized the importance of the corporate travel sector to the UK economy, noting its role in facilitating international trade, supply chains, and investment.

“Despite the increased use of video conferencing, business travel continues to be a necessary component for effectively doing business for many companies and a major area of expenditure,” Coleman stated. “Business travel also plays an important role in the UK economy... A cost-effective, good quality and efficient business travel sector is therefore an important underpinning element of UK productivity and economic growth.”

The CMA’s inquiry has provisionally concluded that the merger would make the combined GBT-CWT entity the dominant force in the corporate travel market, with its nearest competitor operating at roughly half its scale. According to the report, few other providers could offer comparable services to meet the needs of large multinational clients. This dominant position, the CMA warns, could lead to increased costs and reduced service quality for businesses across the UK, which rely on such services to coordinate international travel for their employees.

The assessment included a thorough examination of market share, internal company documents, bidding data, and feedback from customers and competitors. It found that GBT and CWT are currently the primary competitors in the space, with a significant overlap in client needs based on their scale and global coverage.

Coleman added that the CMA’s newly revised Phase 2 process has allowed for more direct engagement with the companies involved, helping the CMA reach a provisional decision earlier than would have been possible under its previous system. This new process aims to improve efficiency and transparency, enabling affected businesses and stakeholders to be more involved throughout the investigation.

“We know businesses have been keenly awaiting our incoming changes, which are designed to deliver a timely step change in aspects of the way the regime works,” Coleman noted. “The effectiveness of our new process is evidenced by the additional and more open engagement we have had with the companies and other businesses affected by this deal.”

The CMA has now opened the floor for further feedback from interested parties, who have until 27 November 2024 to respond to the provisional findings. Pending the results of this consultation, the CMA will issue its final decision on the merger and any potential remedies if competition concerns are confirmed.