A federal judge has ruled that Anthem’s proposed $54 billion takeover of Cigna would be anticompetitive — the second time in three weeks that a court has blocked a healthcare industry megamerger.
Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia said the Justice Department, which brought an antitrust suit against the Anthem-Cigna deal in July, had shown that “the proposed combination is likely to have a substantial effect on competition in what is already a highly concentrated market.”
Jackson’s decision followed that of a colleague on the same court, Judge John D. Bates, who on Jan. 23 upheld the DoJ’s challenge to the proposed $37 billion megamerger between Aetna and Humana.
“Government antitrust officials argued that both deals would lead to less competition and higher prices for Americans,” Reuters reported. “The acquisitions would have reduced the number of large national U.S. insurers from five to three.”
Jackson said the Anthem-Cigna merger would be “enjoined due to its likely impact on the market for the sale of health insurance to ‘national accounts’ — customers with more than 5,000 employees, usually spread over at least two states — within the fourteen states where Anthem operates as the Blue Cross Blue Shield licensee.”
Anthem argued that there was enough competition because large companies often use multiple smaller players in the national market, but the judge disagreed.
“It became quite clear from the evidence that the larger a company gets, and the more geographically dispersed its employees become, the fewer solutions are available to meet its network and administrative needs,” Jackson wrote. “Thus, regional firms and new specialized ‘niche’ companies that lack a national network are not viable options for the vast majority of national accounts, and they will not ameliorate the anticompetitive effects of this merger.”
Anthem said it would appeal, but Matthew L. Cantor, a partner in the law firm of Constantine Cannon, rated the chances of a successful appeal as “very low,” citing the judge’s findings on the concentrated national market, the high barrier to entry for competitors, and the companies’ roles as direct competitors.
