Anthem’s Attempt To Buy Cigna Blocked by Federal Judge

The insurance industry will not shrink from the Big Five health plans into the Big Three, as U.S. District Judge Amy Berman Jackson nixed the proposed $48 billion Anthem-Cigna deal today, saying that it violated federal antitrust law. The ruling echoes one handed down by another court that blocked Aetna’s planned acquisition of Humana.

“Though the two proposed insurer combinations were different in many ways, the message from the courts was similar: Judges found that merging top industry rivals threatened higher prices and less service, with the benefits of those deals failing to outweigh the potential harms,” the Wall Street Journal reports.

Aetna is considering an appeal in its case. That will probably not be the case with the Anthem-Cigna proposed deal, in which court proceedings brought to light just how acrimonious a marriage such a union would be. At one point Anthem executives tried to move forward unilaterally since Cigna ceased cooperating with them on various deal-related issues.

This stumped Jackson. “How do you work on integration without talking to the person you’re integrating with?” she asked.

Today’s ruling will probably not lessen that animosity, the Wall Street Journal reports. “Judge Jackson’s ruling may open up a new chapter of hostilities, especially because the merger agreement calls for Cigna to receive a $1.85 billion breakup fee from Anthem if the deal dies. Anthem has extended the deal’s termination date to April 30, the longest extension it can impose, but Cigna may push back against efforts to keep it in the fold.”

Source: Wall Street Journal