The first of the U.S. Justice Department's highly anticipated healthcare merger challenges is set to start next week in Washington, D.C., as Anthem and Cigna Corp. defend their proposed merger.
U.S. District Judge Amy Berman Jackson will first hear evidence on whether the massive $53 billion merger will negatively impact competition in the national market. If she finds that DOJ shows the national market will be adequately harmed, she could issue a preliminary injunction preventing the merger from moving forward. If not, the DOJ will present evidence on local market concerns starting Dec. 12.
The case could have a major impact on the healthcare insurance market, as well as the two insurers. If both the Anthem-Cigna and Aetna-Humana deals go through, health insurance industry's top five for-profit companies will shrink to three: Aetna, Anthem and UnitedHealth Group.
A court loss will trigger a financial beating for Anthem; the insurer will have to pay Cigna a $1.85 billion breakup fee if the deal doesn't close by April 30, 2017. And Cigna has shown signs that it's had second thoughts about the merger. The DOJ has alerted the federal court that Anthem and Cigna have admitted their relationship has deteriorated since merger plans were announced, and both companies have alleged the other has breached the merger agreement terms.
The feds first announced their plans to contest the $53 billion Anthem-Cigna deal in July, in tandem with Aetna and Humana's proposed $37 billion merger. Since then, the parties have sparred over the timing of the trial and handing over documents.
