The demise of a proposed deal between Staples and Office Depot may be yet another sign that two pending health insurer mergers are in for a tough regulatory review, according to The Street.
The ruling, made public this week, essentially killed a $6.3 billion deal between the two office supply giants. Federal District Judge Emmet Sullivan agreed with the Federal Trade Commission that the merger could cause prices to rise for large corporate customers, which he described as a "separate economic entity."
His ruling cited a failed 2010 merger between ProMedica Health System and St. Luke's Hospital, which regulators scuttled on the ground that it reduced competition among providers of obstetrics in the Toledo, Ohio, market.
Both cases add to evidence that federal regulators are increasingly apt to oppose deals that can damage competition in just one part of the merging parties' business, Debbie Feinstein, director of the FTC's competition bureau, tells The Street.
That isn't good news for the Anthem-Cigna and Aetna-Humana mergers, which both involve companies operating in distinct markets such as Medicare Advantage, administrative services-only policies and individual plans. Already, critics of the mergers have pointed out that it would further consolidate an already highly concentrated Medicare Advantage market.
While a combined Aetna-Humana could divest Medicare Advantage lives to lessen the merger's anticompetitive effect, the Department of Justice has been increasingly skeptical of such remedies on the part of merging companies. Other recent failed mergers, including Halliburton-Baker Hughes and Comcast-Time Warner, also point to a DOJ that is taking a tougher stance on major deals.
Cigna's disclosure signals trouble ahead for insurer mergers
Insurer mergers beware: DOJ flexing its antitrust enforcement muscle
FTC blasts another hospital merger
Report: Divestitures in Aetna-Humana merger won't help Medicare Advantage competition
Competition hard to come by in Medicare Advantage markets
A glimpse into the DOJ's review of health insurer mega-mergers