Good on paper isn’t good enough

Customers count for a lot in merger cases. Congress passed the Clayton Act 102 years ago because the traditional tools of antitrust enforcement were not sufficient to protect consumers. Therefore Congress declared that any merger that may substantially lessen competition is prohibited. The Clayton Act requires the government show probable anticompetitive effects, and does not require proven effects. This allows anticompetitive conduct to be stopped before it occurs.

There are many potential voices wanting to weigh in on the merger trial of Anthem and Cigna, but none is more important than the consumer. Anthem brought declarations of 43 witnesses with credentials such as healthcare professionals, which make it look like Anthem had an avalanche of support. In fact, these declarations were little more than opinions on a piece of paper. Judge Jackson, presiding in this case, was a seasoned litigator before being elevated to the bench, so she saw these declarations for what they were. She ruled to exclude all the “witnesses” who made the declarations, except for those four who had been deposed. Even so, she noted that she would not give weight to opinion-based statements from persons not appearing in court.

A case that looks good on paper - from one side no less - is not good enough to ensure consumers will be protected, the judge concluded. Those witnesses were not put through the same rigorous process as fact witnesses, who must appear in court for questioning from the other side. These declarations were only one side of the story and coming in the form of declarations means they cannot be tested live in court. A live witness is preferable – they would have to explain to the DOJ attorney and the judge that having fewer choices will be a good thing for consumers in an already-concentrated market.

Judge Jackson knows that consumers are nervous about their thinning pocketbooks. Section 7 of the Clayton Act, which allows the DOJ to sue to block the merger, ensures consumers will be protected against companies that seek to use market power to raise prices. The attorneys in Anthem tried to be sneaky and slip these declarations in to make it look like everyday people interacting with the healthcare system thought the market was competitive and this merger would be a good thing. But on Monday, the judge made it clear that paper isn’t enough and excluded almost all of Anthem’s declarations: Round one goes to DOJ.

The ruling could signal warm feelings toward the DOJ's side from Judge Jackson. The trial begins on Monday.