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The Department of Justice is planning on filing an antitrust lawsuit to halt two massive healthcare mergers, Bloomberg reports. The move could halt Aetna's $37 billion merger with Humana and Anthem's $48 billion takeover of Cigna.
If the deals go through, they would reduce the largest health insurance companies from five competitors to three, leading to concerns over stifled competition and harm to consumers. If the DOJ successfully blocks the deals, it could signal a further shift away from the merger mania that's spread throughout large corporate firms in recent years.
Government Concerns Over Competition
The government is concerned that the healthcare mergers will contribute to decreased competition in the healthcare insurance market -- a market that the Obama administration believes needs increased competition in order to improve consumer access to healthcare. "More can and should be done to enhance competition" among health insurance providers, the president wrote in the Journal of the American Medical Association last week. Those comments come on the heels of an April executive order instructing federal agencies to take a more aggressive stance on mergers that could impede competition.
Both consumer advocates and several state attorneys general had also raised concerns about the mergers' potential effect on consumers, Bloomberg reports.
Aetna was the only insurer to issue a public statement in response to the news, saying "we don't comment on rumors or speculation, but we are steadfast in our belief that this deal is good for consumers and the health care system as a whole."
The End of the Merger Era?
If the deals don't go through, 2016 will likely break the record for the most scuttled merger plans, according to the New York Times. So far, $723 billion worth of deals have been called off this year. That's a marked shift from last year, when UnitedHealth Group was the only major insurance company not to take part in any planned mergers.
But it's also part of a growing trend, and one which extends well beyond the healthcare industry. After years of major mergers, the government is increasingly bringing antitrust suits in order to halt such deals. For example, antitrust concerns helped stop Baker Hughes's $35 billion merger with Halliburton and the $6.3 billion merger between Staples and Office Depot, the Times reports.
Of course, one or both of the healthcare mergers may end up going forward, should the companies be able to calm the government's fears. In the meantime, the Department of Justice will decide this week or next whether to file suit over the deals, Bloomberg claims.