CMA clears first case under new Phase 2 merger process

Summary

In April 2024, the Competition and Markets Authority (CMA) issued updated guidance on its merger review process. The most significant changes were to the process for in-depth phase 2 merger reviews and were designed to streamline the process, increase engagement with the Inquiry Group that determines the case and encourage earlier discussions on remedies (see our May 2024 update).

On 6 March 2025, the CMA concluded its first phase 2 review under the revised process and cleared the merger of two travel agency services companies that operate globally (Amex Global Business Travel and CWT). The CMA had initially identified competition issues, but changed its view late in the process.

What you need to know

• This is the first merger to be reviewed under the CMA's new "streamlined" phase 2 process and it is also the first Phase 2 decision since the appointment of Doug Gurr as interim chair of the CMA.
• Unusually, the CMA panel was divided on whether the merger gives rise competition concerns.
• The decision is consistent with the CMA's renewed focus on 'growth' and taking a more proportionate approach to reviewing global deals. However, it remains too early to tell if this is the beginning of a new pro-business CMA.

Background on the merger

The merger relates to Amex Global Business Travel's (GBT) acquisition of rival CWT. Both parties provide travel agency services to business customers and allow corporate customers to search for, book and manage expenses on behalf of business travellers. Both parties supply customers globally.

The CMA's investigation focused on the supply of these services to customers with a high total spend and requirements spanning multiple regions. The supply of these services was found to be global (i.e. suppliers based anywhere in the world can compete to provide such services).

The CMA found this segment of the market was characterised by two large players (the acquirer, GBT, and its competitor BCD) and a tail of smaller competitors. The long tail of competitors included FCM, CTM, Navan and the target (CWT).

Wider context of the merger

This is the first merger reviewed under the CMA's new phase 2 process, which applies to all cases opened by the CMA from 25 April 2024. The new process involves increased engagement with the merging parties, an Interim Report published earlier in the process (replacing the Provisional Findings under the old process) and the opportunity for an earlier discussion on remedies.

It is also the first Phase 2 decision since Doug Gurr was appointed as interim chair of the CMA and the publication of the UK Government's draft strategic steer to the CMA to support growth and investment. On the same day that the draft strategic steer was published, the CMA reiterated the 4Ps (pace, predictability, proportionality and process) framework. The CMA has committed to "rapid, meaningful change based on these principles, starting with the mergers process" which it recognises as a "particularly critical area for investment, including inward investment to the UK". The CMA has stated that it will take a proportionate approach to reviewing global deals.

Given the parties' global reach, the merger is also being reviewed in the United States and on the 10 January 2025 the Department of Justice filed a lawsuit to block the merger. Despite approval from the CMA, the merger therefore still faces an uncertain future.

The CMA's analysis

The CMA decision turns on two key issues.

• First, the CMA found that CWT had been in a weak financial position since the Covid-19 pandemic and has struggled to retain and win new customers in recent years. For example, the CMA's analysis showed that CWT was the only supplier in the market to be shrinking, with all other suppliers experiencing double-digit growth. Turning to the question of the future of CWT, the CMA found "its financial position is unlikely to improve and it potentially faces a trajectory of continuing to lose more business than it will gain".
• Second, the CMA conducted an analysis of bidding data and recent customer wins, with a particular focus on recent data. The CMA's analysis confirmed that BCD was a strong constraint on the parties. The CMA also concluded that whilst the remaining competitors were currently much smaller than the parties their customer volumes have been "consistently and substantially increasing" and it is expected that they "will exert increased competitive constraints in the market".

In combination, these factors led the CMA to conclude that the competitive constraint imposed by CWT was declining, whilst that imposed by other suppliers was increasing.

The CMA's findings are heavily reliant on the results of bidding data, with relatively little weight placed on other factors it typically considers important. For example, the parties had a combined market share of 50-60% (with an increment of 10-20%), which is a level which would typically raise concerns. In addition, the CMA's conclusion places relatively little weight on feedback from customers and internal documents which suggested that the parties were close competitors.

Outcome of the CMA review

In its Interim Report, the CMA had provisionally identified competition concerns. However, the CMA issued a supplemental report on 18 February 2025 which took into account new evidence relating to the target's financial health and the strength of competitors and reversed their provisional competition concerns to clear the merger.

The CMA's conclusion was finely balanced. Phase 2 merger decisions are typically decided by a panel of four independent members, with a two-thirds majority (i.e. at least three out of four) being required to identify competition concerns. This case was a relatively rare instance of the CMA panel being evenly split.

Implications for future cases

Under the revised Phase 2 process, the CMA published its Interim Report earlier than Provisional Findings would have been published under the previous process. The subsequent publication of a supplemental Interim Report is consistent with the CMA issuing a more provisional report under the revised Phase 2 process, suggesting that the outcome of more cases may change between the interim and final report stages.

The decision in this case is also consistent with the CMA's intention to take a less interventionist role in global deals.

This is the first case to have been completed under the new process so it is too early to draw firm conclusions. It was not unusual for the CMA to change provisional findings under the old Phase 2 process and, with only two other ongoing phase 2 cases, it will take time to determine if this represents a genuinely new approach from the CMA consistent with their pro-growth and pro-business agenda.

Want to know more?

• CMA adopts new Phase 2 merger process (3 May 2024) https://www.ashurst.com/en/insights/cma-adopts-new-phase-2-merger-process/