Widening merger-review approach could stymie insurer deals

A shift in how antitrust officials examine the anticompetitive effects of mergers could add to the mounting challenges faced by the Aetna-Humana and Anthem-Cigna deals, Bloomberg reports.

The Justice Department and Federal Trade Commission are increasingly apt to review mergers' effects on competition nationally--not just locally. 

Taking a wider view of competition is a considerable departure from regulators' typical strategy for merger reviews, during which they examine a deal's effects on individual local markets and require divestitures if needed.

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Executives at the merging health insurers have advocated for the traditional review tactics, arguing that all healthcare markets are local.

The insurers' position makes sense given the fact that on a national scale their deals will further consolidate what experts have pointed out is an already highly concentrated industry.

Yet Mark Ryan, a lawyer at the firm Mayer Brown who formerly worked in the DOJ's antitrust division, tells Bloomberg that as industries evolve, regulators can depart from their past merger-review playbook.

Given that, regulators are also less likely to approve deals based solely on divestitures that remedy localized threats to competition, Fiona Scott Morton, a Yale University professor and former chief economist in the DOJ's antitrust division, tells the news outlet.

In addition to the regulatory hurdles the two insurer deals face, the Anthem-Cigna merger is on shaky ground in the wake of reports that its leaders have been feuding over various issues.

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