Two insurance giants call off their planned merger after a D.O.J. lawsuit.


Daily Business Briefing

July 26, 2021, 9:31 a.m. ET

July 26, 2021, 9:31 a.m. ET

Credit…Jakub Porzycki/NurPhoto, via Getty Images

Two of the world’s largest insurance brokers, Aon and Willis Towers Watson, announced on Monday that they had called off a planned $30 billion merger, just a little more than a month after the Department of Justice sued to block the union.

The D.O.J.’s case against the proposed merger was the first big trustbusting move by the Biden administration, which has signaled a willingness to be tough on corporate consolidation.

This case is arguably the first antitrust win for President Biden, who named Jonathan Kanter last week to run the D.O.J.’s antitrust division. Mr. Kanter has spent much of his career fighting Big Tech on behalf of smaller companies. Mr. Biden has named other critics of Big Tech to prominent roles, such as Lina Khan to lead the Federal Trade Commission and Tim Wu, who serves in an economic policy role at the White House.

On Monday, Aon and Willis Towers Watson said they decided to end the Justice Department’s litigation and move forward independently.

“We reached an impasse with the U.S. Department of Justice,” Aon’s chief executive, Greg Case, said in a statement.

The agreement, first proposed in March 2020, faced scrutiny from regulators around the world. Some, including officials in the European Union, granted conditional approval based on various concessions and divestments.

The D.O.J. lawsuit was not scheduled to head to trial until at least November, which would have delayed the deal until the first quarter of 2022 at the earliest and was untenable for Aon, a company spokesman told The New York Times.

The D.O.J.’s complaint argued that the combined companies would “eliminate substantial head-to-head competition and likely lead to higher prices and less innovation.” It said the companies dominate markets for risk and reinsurance brokering, health and pension benefits brokering, actuarial services for employer benefit programs and private exchanges that offer retiree benefits.

The government said previously the companies were aware they already operated in an oligopoly. “If permitted to merge, Aon and Willis Towers Watson could use their increased leverage to raise prices and reduce the quality of products relied on by thousands of American businesses — and their customers, employees and retirees,” the D.O.J. wrote last month.

Aon argued in its statement calling off the deal that the D.O.J. misunderstood its businesses. “We are confident that the combination would have accelerated our shared ability to innovate on behalf of clients, but the inability to secure an expedited resolution of the litigation brought us to this point,” Mr. Case said in the statement.

With the merger terminated, a slew of contingent deals will be called off, too. Some of the regulatory approvals that the combined companies received, for example in South Africa and the European Union, were dependent on Aon and Willis getting rid of some business units.

Aon said it would pay a $1 billion termination fee to Willis Towers Watson.

Both companies are incorporated in Ireland and have headquarters in London. Aon, which reported revenue of more than $11 billion last year, has around 50,000 employees around he world and more 100 offices in the United States. Willis Towers Watson employs about 45,000 people globally, with more than 80 offices in the United States. It reported revenue of more than $9 billion in 2020.

Chinese regulators on Monday banned tutoring companies from making profits, a move that sent their shares plummeting, erasing tens of billions of dollars from the value of the country’s once blistering education sector, as Beijing turns its focus to the growing financial burden that students — and their parents — face.

Some of China’s biggest publicly listed education companies lost significant chunks of their value as investors ditched them following the announcement of rules that require all companies that offer curriculum tutoring to register as nonprofit institutions.

The rules will also restrict new foreign investment, once a key avenue for those companies to raise money. They are the latest in a series of moves by China to rein in its technology sector that has hit stocks of its biggest companies, in sectors as diverse as ride hailing and music licensing. Regulators say that they are tackling privacy, cybersecurity and antitrust concerns, directing their crackdown at the country’s thriving internet industry.

Koolearn Technology, which provides online classes and test-preparation courses, said that it expected the rules to “have material adverse impact” on its business. Its stock lost 33 percent on Monday. A handful of other Hong Kong-listed education companies, including New Oriental Education & Technology and Scholar Education Group, along with the U.S.-listed companies Gaotu Techedu and TAL, issued similar statements. TAL lost 71 percent of its value on Friday, while Gaotu lost 63 percent.

For years, China’s private education sector was one of the most enticing for global investors, who threw billions of dollars at publicly listed companies that promised to capitalize on the hundreds of thousands of families striving for better opportunities through education. By Monday evening in Asia, much of that money had vanished.

Credit Suisse has settled with a former high-ranking executive who had accused the Swiss bank of spying on him, claims that eventually led to the ouster of the firm’s chief executive.

What began in 2019 with a public argument between Iqbal Khan, a wealth-management banker who had recently defected to UBS, and a corporate spy exploded into a rapidly escalating scandal. Credit Suisse’s then-chief operating officer, Pierre-Olivier Bouée, resigned after he was accused of ordering the surveillance of former colleagues.

The scandal culminated in early 2020 with the resignation of the bank’s chief executive, Tidjane Thiam, who had pledged to overhaul the controversy-prone Swiss bank. Mr. Thiam denied knowledge of the espionage operation.

A spokeswoman for Credit Suisse, Simone Meier, said in a statement on Monday that the bank had resolved Mr. Khan’s complaint against the corporate investigators that the bank had hired.

“All involved parties have agreed to settle,” Ms. Meier said. “This matter is now closed.”

Even as 609,000 Americans have died from the coronavirus and the Delta variant surges, as restaurants and other businesses shut down and as millions of workers found themselves unemployed, the tech industry flourished in the pandemic.

The combined stock market valuation of Apple, Alphabet, Nvidia, Tesla, Microsoft, Amazon and Facebook increased by about 70 percent to more than $10 trillion. That is roughly the size of the entire U.S. stock market in 2002. Apple alone has enough cash in its coffers to give $600 to every person in the United States. And in the next week, the big tech companies are expected to report earnings that will eclipse all previous windfalls.

Silicon Valley, the world headquarters for tech start-ups, has never seen so much loot, reports The New York Times’s David Streitfeld. More Valley companies went public in 2020 than in 2019, and they raised twice as much money when they did. Forbes calculates there are now 365 billionaires whose fortunes derive from tech, up from 241 before the virus.

Tech is triumphant in a way that even its most evangelical leaders couldn’t have predicted. No single industry has ever had such power over American life, dominating how we communicate, shop, learn about the world and seek distraction and joy.

“Call it half luck — being in the right place at the right time — and half strategic tactics by companies recognizing this was going to be a once in a lifetime opportunity,” said Dan Ives, a managing director at Wedbush Securities. “What for most industries were hurricane-like headwinds was a pot of gold for tech.”

The Federal Trade Commission on Friday asked a federal judge to give it more time to refile an antitrust suit against Facebook that is the agency’s biggest test in reining in the power of big tech.

In a filing with the U.S. District Court for the District of Columbia, the agency asked for a three-week extension, or until Aug. 19, to amend a lawsuit that the court dismissed last month. The F.T.C. said in its request that it had reached an agreement with Facebook over the proposed extension.

Last month, Judge James E. Boasberg of the federal court knocked down a core argument made by the F.T.C., saying prosecutors had failed to provide enough persuasive facts to back up the claim — that Facebook holds a monopoly over social networking. But the judge gave the F.T.C. a 30-day window to refile its lawsuit.

The new lawsuit will be the first major action by Lina Khan, the new chair of the F.T.C. and a critic of Facebook, Google and Amazon who has advocated for the breakup of the digital platforms.



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