Anthem-Cigna Merger Blocked; Judge Cites Anticompetitive Effects
A judge has blocked the proposed merger of Anthem and Cigna, saying consolidation would likely result in higher prices and have other anticompetitive effects. The ruling comes just 2 weeks after another judge blocked the Aetna-Humana merger.
The proposed merger between Anthem and Cigna has been blocked following a judge’s ruling that the deal would be harmful to customers. With the $48 billion purchase derailed, Anthem will have to pay Cigna a $1.85 billion break-up fee.
The decision comes just
Anthem and Cigna are the nation’s second and third largest insurers, and the Department of Justice (DOJ) had
“Today’s decision is a victory for American consumers,” Acting Assistant Attorney General Brent Snyder of the DOJ’s Antitrust Division,
The DOJ was joined by 11 states and the District of Columbia in the lawsuit to prevent the merger of Anthem and Cigna, and the judge determined that they had demonstrated “the proposed combination is likely to have a substantial effect on competition in what is already a highly concentrated market.”
Judge Amy Berman Jackson of the Federal District Court for the District of Columbia ruled in the lawsuit that the merger would have harmed customers in 14 states where Anthem operates as Blue Cross Blue Shield.
“The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects: it will eliminate the two firms’ vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market,”
In response to the ruling, Cigna released a
“If not overturned, the consequences of the decision are far-reaching and will hurt American consumers by limiting their access to high-quality affordable care, slowing the industry’s shift to value-based care and improved outcomes for patients, and restricting innovation, which is critical to meeting the evolving needs of healthcare consumers,” Joseph R. Swedish, chairman, president, and CEO of Anthem,
Interestingly, in her ruling, Jackson cited conflicts between the companies, noting that she could not ignore testimony from Cigna officials that undermined the projections of future savings. She noted that the so-called “rift between the CEOs” and other differences between the companies could not be ignored as they “reflect that the pre-merger integration planning that is necessary to capture any hoped-for synergies is stalled and incomplete.”
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