The US Department of Justice has taken legal action to block Aon’s proposed $US30 billion ($39 billion) acquisition of Willis Towers Watson, arguing proposed divestments fail to resolve concerns that customers will be adversely affected.

An anti-trust lawsuit says Aon, Willis Towers Watson and Marsh McLennan are so significant that they are referred to as the “Big Three”, dominate insurance broking for the largest companies in the US, and competition between them provides significant benefits.

“Allowing Aon and Willis Towers Watson to merge would reduce that vital competition and leave American customers with fewer choices, higher prices and lower quality services,” Attorney General Merrick Garland said.

Issues centre on property, casualty and financial risk broking for large customers, health benefits broking for large customers, actuarial services for large single-employer defined benefit pension plans, the operation of private multicarrier retiree health plan exchanges and reinsurance broking.

Aon said last month it would divest a suite of businesses including reinsurance broker Willis Re to Arthur J. Gallagher for $US3.57 billion ($4.65 billion) in a bid to alleviate regulatory concerns around the world.

But the Justice Department says in property, casualty and financial risk broking and in health benefits the asset sales “would not come close” to fully maintaining the competition that would otherwise be lost in the US market.

“The defendants’ proposed divestitures leave much of the harm from the proposed merger unremedied,” the filing says. “The court should enjoin the proposed merger in its entirety.”

Aon and Willis Towers Watson say they are continuing to make progress with other regulators and remain committed to the benefits of the combination.

“We disagree with the US Department of Justice’s action, which reflects a lack of understanding of our business, the clients we serve and the marketplaces in which we operate,” they say.

The companies maintain the merger would accelerate innovation, creating more choice in an already dynamic and competitive marketplace.

“While this proposed combination was not developed with the pandemic in mind, the impact of the pandemic underscores the need to address similar systemic risks including cyber threats, climate change and the growing health and wealth gap which our combined firm will more capably address,” a statement says.

The European Commission has a provisional deadline of August 3 for its decision, while the Australian Competition and Consumer Commission has said it will announce a proposed decision “in due course”.