Merger Mania: How Recent Enforcement Actions May Spell Trouble For Health Insurance Mergers
The United States is in the midst of merger mania. Overall, 2015 will likely be a record year for the number of acquisitions and mergers. As a result, the enforcement agencies, including the Federal Trade Commission and Department of Justice, have been very active in reviewing and analyzing deals. And while many may assume that the vast majority of these deals will receive a rubber stamp, two recent cases demonstrate the enforcement agencies’ commitment to the law and consumers.
Last week the FTC challenged the merger of business supply super stores Staples and Office Depot. In their complaint, the FTC noted that there was going to be a substantially lessening co competition for “large business customers.” Moreover, while the parties had discussed a potential settlement, the FTC was unwilling to allow the merger to move forward given the anticompetitive harm in the form of higher prices on office supplies. The FTC will now be seeking a preliminary injunction to halt the merger with trial starting in March 2016.
The DOJ has also been active in challenging problematic mergers. In mid-2015, the DOJ challenged Electrolux’s acquisition of General Electric, two of the largest makers of major cooking appliances. The merging parties attempted to argue a number of procompetitive efficiencies for the merger and even tried to settle, but the DOJ was content with taking the case to court. Last week, the parties dropped the merger, and as a result, Electrolux has been forced to pay a $175 million termination fee.
This renewed focus on preventing anticompetitive mergers could directly speak to the current analysis and review of the pending health insurance mergers of Anthem-Cigna and Aetna-Humana. As has been discussed by the Coalition to Protect Patient Choice, the DOJ, along with the State Attorney Generals and Insurance Commissioners, are actively investigating these two health insurance mergers. These two mergers would combine four of the nation’s five national insurers and could lead to increases in consumer premiums, less access, and lower quality of care. Given the recent waves of mergers and the enforcement agencies appetite for not only investigation but also active enforcement, these mergers may not be so easily consummated.
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