Anthem, Cigna hear skepticism about deal and divestitures from DOJ’s Baer

31 January 2017 9:55am

25 June 2016. 

The US Department of Justice's No. 3 official told representatives of Anthem and Cigna in a meeting Friday that their proposed merger raises significant antitrust concerns and any proposed fix isn't likely to remedy the problems, MLex has learned.

The comments made in the meeting by Acting Associate Attorney General Bill Baer echo the conclusions of department staffers who have been reviewing the $54.2 billion deal for almost a year.

The staffers believe that the merger of two of the largest US health insurers would leave too few coverage options for large employers seeking policies for their workers. The DOJ also fears that the transaction would give the merged company too much power in negotiating reimbursement rates with hospitals and doctors, and shrink insurance options for individuals (see here).

A Justice Department spokesman declined to comment. Spokespeople for Anthem and Cigna didn't immediately respond to requests for comment.

Anthem plans to present the Justice Department with a proposed divestiture to one or two rivals in an effort to address the government concerns about the corporate market. Anthem also will propose a separate divestiture to inject more competition into the market for individuals.

The DOJ has no obligation to wait for Anthem's offer before filing a lawsuit. In 2011, it surprised AT&T by suing to block its proposed acquisition of T-Mobile USA even before the company had detailed its plan to sell off assets to rivals.

In other cases, the department has spent months evaluating divestiture proposals before deciding whether to sue, such as in its review of the Halliburton-Baker Hughes and Applied Materials-Tokyo Electron deals. Both deals were abandoned in the face of DOJ opposition.

At MLex we take your privacy seriously. As detailed in our Privacy Policy  we will use your personal information to administer account and provide the products and services that you have requested from us.

MLex Limited and our LexisNexis Legal & Professional group companies may contact you in your professional capacity with information about our other products, services and events that we believe may be of interest. You can manage your communication preferences via our Preference Center.  You can learn more about how we handle your personal data and your rights by reviewing our Privacy Policy.

You’ll be able to update your communication preferences any time by clicking here or via the unsubscribe link provided within our communications.