Singapore watchdog plans ‘further review’ of Aon-WTW merger

The Competition and Consumer Commission of Singapore (CCCS) has “identified areas for further review” following an initial investigation into Aon’s proposed £30bn acquisition of Willis Towers Watson (WTW).

The statutory board undertook a public consultation of the merger on 9 April 2021 after Aon issued a notification that the proposed transaction could infringe section 54 of the Competition Act, which prohibits mergers that may be expected to result in a substantial lessening of competition within any market in Singapore.

Aon told CCCS that this may occur in relation to the supply of retirement benefits and human capital consulting services, as Aon and WTW both offer this provision.

On 29 June 2021, CCCS confirmed that it had completed its initial review of the merger and, based on information provided by Aon and third parties, the watchdog “has identified areas for further review in respect of the proposed transaction, pertaining to executive compensation and related consulting services, as a sub-segment under human capital consulting services”.

Limited alternatives

Feedback from third parties told CCCS:

• Following the transaction, the merged entity will become the largest provider of executive compensation and related consulting services in Singapore, so there will be limited alternative providers available that are able to compete effectively in Singapore.
• There may be barriers to entry and expansion within the marketplace due to limited consulting personnel who possess the necessary expertise and experience in providing executive compensation and related consulting services in Singapore.
• Building up a database of compensation data, which underpins the provision of executive compensation and related consulting services in Singapore, may constitute a barrier to entry.

Based on these points, CCCS said it “needs to further review the competition effects of the proposed transaction in greater detail”.

Now, parties are able to offer commitments that address these potential competition concerns – commitments can be submitted at any point during the review process.

Upon receipt of the required documents from Aon, the CCCS will proceed to a “detailed further review” of the proposed transaction.

Under its statutory remit to administer and enforce Singapore’s Competition Act, CCCS believes that competition concerns are unlikely to arise in a merger situation unless:

• The merged entity has/will have a market share of 40% or more.
• The merged entity has/will have a market share of between 20% to 40% and the post-merger combined market share of the three largest firms is 70% or more.

Aon and WTW have declined to comment.