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.
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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