Judge Forbids The $48 Billion Anthem-Cigna Merger; Anthem Files Appeal
Feb 10, 2017 08:08 AM EST
U.S. federal judge blocked the merger plan between two health insurance companies on Wednesday. Merger between Anthem and Cigna was deterred due to potential harm to their customers. The next day after the court order, Anthem filed an appeal .
Judge Amy Berman Jackson from the Federal District Court for the District of Columbia ruled to prevent the $48 billion merger between the two health insurance companies on Wednesday, Feb. 8 as reported by CNBC. The judge ruling to block merger plan between Anthem and Cirna was taken based on the customers interest. In her order Judge Jackson wrote that the merger between the two companies will harm the customers.
“The evidence has also shown that the merger is likely to result in higher prices,” Judge Jackson wrote in the court order. “It it will have other anticompetitive effects."
Judge Jackson also cited other reasons, including the elimination of vigorous competition against the two companies. The merger will also diminish prospect for market innovation in the future. Following the court blockade on the merger plan, Anthem filed the notice of appeal according to Bloomberg.
Under the merger agreement term between both companies, the failed merger will cost Anthem $1.85 billion breakup fee to Cigna as the consequences. CEO of Anthem Joseph Swedish also regretted the decision, saying the company is greatly disappointed by the court order. He argued the court ruling is to be overturned, otherwise it will hurt the American customers.
Two weeks earlier on Jan. 23, another health insurance’s merger plan between Aetna and Humana was also blocked by Federal Judge John Deacon Bates in the same court. Judge Bates declined the $37 billion merger plan citing the it will eliminate competition. With two consecutive court ruling deterring merger between the health insurance companies, the industry must elaborate a better way to increase their efficiency. Watch the report from Reuters regarding the judge decision to block the merger between Anthem and Cigna below: