Trump administration inaction seals Anthem’s fate, delays Dow-DuPont

12 May 2017. By Curtis Eichelberger.

It's been nearly four months since President Donald Trump took office and the administration still hasn't filled key positions at the Department of Justice and Federal Trade Commission — a failure with significant ramifications for dealmakers.

The administration's inaction is causing a slowdown in the processing of antitrust cases that are largely concluded but are waiting for key managers to move them to completion. Dow-DuPont is one example of a merger that cleared government hurdles back in February, but hasn't been formally approved.

On Thursday, a Delaware judge ruled that health insurer Cigna could end its $54.2 billion merger deal with Anthem, leading to Friday's decision by Anthem to terminate the deal and seek monetary damages.

Anthem said during a court hearing Feb. 15 that it saw two avenues to complete its merger with Cigna: victory in appellate court, or convincing the new leaders at the DOJ that the deal isn't anticompetitive. The court was willing to give Anthem a shot.

After a federal appellate court ruled against Anthem, that path to victory narrowed, and — as Vice Chancellor Travis Laster of the Delaware Court of Chancery said in his decision — there is nobody at the DOJ with whom to cut a deal.

"The second path, a settlement with the Department of Justice, also appears quite difficult," Laster said. "There have been no negotiations. Indeed, as of yet, there is no one who has been appointed who can negotiate with Anthem."

The Anthem-Cigna merger was challenged by the Department of Justice last July and blocked by a US district court in February. The case was appealed to the DC Circuit, which upheld the lower court's ruling in April, and Anthem proposed that the case should go to the Supreme Court.

Meanwhile, the companies went to a Delaware Court to decide if their agreement could be extended beyond the merger deadline of April 30. Thursday night, Laster denied Anthem's motion to stop Cigna from terminating the merger, leading to Anthem's surrender.

The legal action taken after Anthem's loss in district court bought time so the government could staff up, but the two relevant appointees that actually were named would have had to recuse themselves from Anthem-Cigna talks.

Makan Delrahim, President Trump's nominee to head the DOJ's antitrust division and a former Anthem lobbyist, said Wednesday during his confirmation hearing that he would recuse himself from reviewing the case.

Delrahim worked as a lobbyist at Brownstein Hyatt Farber Schreck. In addition to his work for Anthem in 2016, he lobbied for companies including chipmaker Qualcomm, drugmaker Pfizer and investment company The Mentor Group, according to the Lobbying Disclosure Act Database.

Andrew Finch, a partner at Paul Weiss in New York, took charge of the antitrust division starting April 10 while waiting for the Senate to confirm Delrahim. He, too, would have had to recuse himself because his former firm represented Cigna.

The DOJ has four deputy assistant attorney generals yet to be hired, and it's unclear how many other deals will be delayed by the government's failure to fill the chairs of the people charged with evaluating those transactions.