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Bloomberg's Rie on US Antitrust Suits Against ANTM, AET (Audio) · Bloomberg Intelligence

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  Speaker 1: I'm Charlie Peloton. That's a Bloomberg business flash you're listening
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  Speaker 1: to taking start with Kathleen Names and Pim Fox on
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  Speaker 1: Bloomberg Radio. The shares of ETNA are down nearly three
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  Speaker 1: percent today, Anthem shares down two percent, a Signa Corpet
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  Speaker 1: down two percent, Humanity down three and three quarters of
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  Speaker 1: a percent. Why while the Justice Department close to challenging
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  Speaker 1: Anthems proposed acquisition of Signa and Etness plan combination with Humanity,
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  Speaker 1: This took all according to people familiar with the matter.
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  Speaker 1: Here to tell us more, Jennifer relitigation analyst Bloomberg Intelligence.
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  Speaker 1: this function at b I go. Jennifer, thanks for coming in.
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  Speaker 1: Appreciate it all, right, so tell us maybe give us
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  Speaker 1: an update about what has been going on. It's been
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  Speaker 1: going on for a long time. I think more than
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  Speaker 1: a year, right, Well, first, thanks for having me really
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  Speaker 1: appreciate it. Um, this has been going on for more
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  Speaker 1: than a year as a matter of fact. Second, request
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  Speaker 1: for information, which are really just the in depth sort
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  Speaker 1: of subpoena that the d o J issues to parties
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  Speaker 1: to investigate deals, were issued to both of these in
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  Speaker 1: both of these murders last July. So we're talking about
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  Speaker 1: a full year investigation. But nowadays that's not unusual for
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  Speaker 1: big complex mergers that are likely going to need remedies
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  Speaker 1: or actually be problematic, which it is beginning to look
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  Speaker 1: like these will be. Use the word remedy and I
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  Speaker 1: want to maybe you can define what that what that describes.
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  Speaker 1: So essentially, when the DJ or the FTC investigates a
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  Speaker 1: deal and they think Trade Commission, Federal Trade Commission, yes,
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  Speaker 1: sorry about that, And they think that some aspect of
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  Speaker 1: a merger could have a bad effect, could cause a
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  Speaker 1: lack of innovation or increased prices, they first look to
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  Speaker 1: see whether there's something that can be done, some piece
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  Speaker 1: of one of the businesses, let's say, that can be
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  Speaker 1: sold off to another competitor to replace the competition that
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  Speaker 1: would be lost by virtue of the merger. If that
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  Speaker 1: can be done, and it can be done to their
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  Speaker 1: the regulators satisfaction, then the larger deal, the underlying deal
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  Speaker 1: can usually go ahead and some small piece of business
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  Speaker 1: is sold off and that's usually called a remedy. It's
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  Speaker 1: fixing whatever the problem is. So I have none of
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  Speaker 1: the company has been able to fix the problem. Is
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  Speaker 1: this what is at stake? Well, it looks like that's
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  Speaker 1: the direction this is going in. We we have heard
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  Speaker 1: a lot about Etna and Humanita trying to fix the
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  Speaker 1: issues that they may have in an overlap in medicare advantage.
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  Speaker 1: They do, they do. They are both active in that
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  Speaker 1: area which is looked at locally by the Department of Justice,
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  Speaker 1: and a lot of us thought that there may be
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  Speaker 1: a way for them to sell off in different counties
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  Speaker 1: where they have overlaps to sell off those plans. Now
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  Speaker 1: they really overlap across the country a lot in medicare advantage,
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  Speaker 1: and it would have taken a significant number of divestitures,
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  Speaker 1: and that may be the sticking point here. On the
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  Speaker 1: other deal, it was less clear how that problem, the
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  Speaker 1: problems there could be remedied. And the reason there's be
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  Speaker 1: has Anthem and Signa really compete more in a national
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  Speaker 1: In a national scale, they offer administrative services for large
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  Speaker 1: companies that self ensure um and a lot of these
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  Speaker 1: large companies, like what we saw in the Stables deal,
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  Speaker 1: and like what we saw in in the Cisco US
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  Speaker 1: Food seal, like one entity or even two with which
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  Speaker 1: they can contract contract across the country for all of
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  Speaker 1: their divisions and branches. And it's harder to see how
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  Speaker 1: you might fix the significant overlap those two companies have
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  Speaker 1: in administrative services. So this is all about competition right exactly. Now,
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  Speaker 1: as far as the companies are concerned, can they then
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  Speaker 1: appeal the decision whatever that may or may not be
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  Speaker 1: from the Justice Department. Oh, of course, from here it
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  Speaker 1: goes into practically, you know, essentially litigation. The Department of
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  Speaker 1: Justice does not have the power to block a merger
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  Speaker 1: that it thinks is anti competitive or we'll have do
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  Speaker 1: will cause harm to the market. The Department of Justice
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  Speaker 1: has to ask a judge to issue in order blocking
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  Speaker 1: the deal. And that's what we're hearing now that Bloomberg
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  Speaker 1: News basically has reported that they're hearing that the Department
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  Speaker 1: of Justice is ready to go to court to ask
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  Speaker 1: a judge to or judges since it's two deals to
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  Speaker 1: block these deals. Um, and what they have to do
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  Speaker 1: is win in court, so you still have a possibility
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  Speaker 1: a that the parties can settle these matters. Um. This
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  Speaker 1: has happened sometimes after a complaint is filed or be
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  Speaker 1: that the Department of Justice loses in court, which also
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  Speaker 1: sometimes happens. The deals are not the same, just to
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  Speaker 1: be clear, right right, don't want I mean, even though
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  Speaker 1: we're talking about healthcare deals. I mean, for example, the
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  Speaker 1: Anthem Signet deal would be a forty eight billion dollar deal,
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  Speaker 1: and that would create a health insurer with what like
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  Speaker 1: fifty four million members and a hundred and seventeen billion
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  Speaker 1: dollars in annual revenue. Right, Yes, that's a much bigger deal,
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  Speaker 1: and I think all along, even a year ago, a
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  Speaker 1: lot of analysts expected that deal to have more trouble
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  Speaker 1: getting through the d o J than the smaller Ethnic
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  Speaker 1: Humanity deal, which is not only smaller but different in
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  Speaker 1: nature in the way those two companies compete. Yeah, that's
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  Speaker 1: about a lot about the medicare plans correct, All right, Well,
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  Speaker 1: you're gonna have to keep us up to date on
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  Speaker 1: what goes on. Thank you very much, absolutely, thank you.
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  Speaker 1: Jennifer Ree, litigation analyst for Bloomberg Intelligence of Bloomberg Intelligence
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