Judge blocks Anthem-Cigna health insurance mega-merger
SAN FRANCISCO - A US judge on Wednesday blocked Anthem's plan to merge with Cigna, saying the merger of the health insurance titans would bode ill for competition in the market.
Anthem's plan to take over Cigna in a deal valued around $50 billion was opposed in court by the Department of Justice with backing from eleven US states.
"Plaintiffs have carried their burden to show that the effect of the acquisition may be to substantially lessen competition," US District Judge Amy Berman Jackson said in a written ruling handed down late Wednesday in Washington.
Anthem took the lead in defending the merger, arguing that any anticompetitive effects would be outweighed by efficiencies generated, according to the judge.
"Anthem is encouraging the court to ignore the risks posed by the proposed constriction in the health insurance industry in the relevant market on the grounds that consumers might benefit from the large size of the new company in other ways at the end of the day," Jackson said in the ruling.
"But this is not a cognizable defense to an antitrust case; the antitrust laws are designed to protect competition."
A US judge in Florida last month blocked Aetna's proposed $37 billion acquisition of rival health insurer Humana, ruling the combination would stifle competition in the health sector.
US District Judge John Bates upheld the essential arguments of antitrust regulators who sued to block the deal, saying that combining two of the big five American health insurers would harm consumers.
Anthem and Cigna are the second and third largest US medical insurance carriers, and combining the companies would have created the largest in the country.
"This merger would have stifled competition, harming consumers by increasing health insurance prices and slowing innovation aimed at lowering the costs of healthcare," acting DOJ assistant attorney general Brent Snyder said in a released statement.
Both mergers would have redesigned the health insurance landscape, but were opposed by US authorities convinced they would cripple competition while sending people's medical costs racing skyward.
Anthem in July of 2015 announced that months of negotiations had resulted in an agreement to buy Cigna, paying partly in cash and partly in shares in a deal valued at more than $54 billion at the time.
The two insurance companies boast combined revenue of $115 billion and some 53 million customers.