Mark Pestronk
Q: What's your legal and business view of Amex GBT's acquisition of CWT? Will it pass muster with the antitrust authorities? Will it be good for corporate TMCs and travel agencies in general?
A: The acquisition will probably not be blocked by antitrust authorities, either in the U.S. or the EU. The acquisition will be good for corporate travel sellers and buyers, and it may be good for travel agency revenue.
Full disclosure: I don't represent either Amex GBT or CWT, and I don't own any Amex or Amex GBT stock, although I may in the future if the stock price begins to benefit from the acquisition. My perspective is that of travel agencies, including other TMCs, many of which are my clients.
Under the competition laws, which are called antitrust laws in the U.S., the test of legality is whether a merger or acquisition harms competition in a particular market. It is hard to see how such harm could occur, for several reasons.
First, although both Amex GBT and CWT specialize in corporate travel, there is really no such thing as a distinct corporate travel market. Every travel seller, including every airline and every travel agency, from the megas down to the home-based advisor, is capable of providing travel arrangements to business travelers. When the entire market of travel sellers is considered, it is obvious that Amex GBT plus CWT will have just a small portion of the travel market.
Second, while it is true that those two competitors serve the vast majority of U.S. companies with the 100 largest travel volumes, according to the 2022 Corporate Travel 100 (which is issued by a Travel Weekly sister publication Business Travel News), there are still TMCs that could take their place and provide services on the same level those two companies have provided.
Aside from antitrust law considerations, both Amex GBT and CWT have been formidable competitors to other TMCs in corporate-travel procurements. Without one of the two players, opportunities for other TMCs should increase.
In my experience, some TMCs are deterred from submitting proposals to companies and government agencies because the TMC executives figure that the company will go with the safe choice of the most well-known names in the business. After the acquisition, procurement officials will be more likely to consider lesser-known names in order to ensure that there is meaningful competition in procurements.
Both Amex GBT and CWT compete for midsize and smaller corporate accounts (aka small- and medium-size enterprises, or SMEs), and both have adopted technology tools designed to appeal to those companies, which are the bread and butter of smaller corporate agencies. Again, with one major competitor gone, there would be new prospects for smaller corporate agencies.
Finally, the acquisition might well have a positive effect on commissions and GDS incentives, especially for NDC bookings, where the GDS vendors and airlines have been stingy. Amex GBT will be in a better position to negotiate with suppliers, and other agencies could benefit from what it is able to achieve.