Anthem Begins Defense of Cigna Merger at Antitrust Trial
November 29 2016 - 7:30PM
Dow Jones News
WASHINGTON—Anthem Inc. executives told a judge Tuesday that
consumers would benefit from the company's proposed acquisition of
Cigna Corp., saying the new company would be highly innovative
while not reducing the fierce competition in the health insurance
marketplace.
The testimony came as Anthem began its courtroom defense of its
planned acquisition of rival insurer Cigna, putting on the witness
stand its own executives to testify about the deal's benefits.
Morgan Kendrick, an Anthem executive in charge of national
customer accounts, said innovation "is oxygen to our business" and
Cigna "is exceptionally innovative…That's something that's very
attractive to our company."
Mr. Kendrick also said that, contrary to the government's
assertions, the health insurance market would remain competitive if
Anthem's deal for Cigna is approved by U.S. District Judge Amy
Berman Jackson, who is presiding over an antitrust challenge to the
transaction brought by the Justice Department.
While Cigna has admirable strengths, Mr. Kendrick said, it is
not a top competitor of Anthem's. Anthem, he said, competes most
fiercely head-to-head with UnitedHealth Group Inc. and Aetna
Inc.
The Justice Department sued to block the deal in July, while
simultaneously challenging another major insurance deal that would
combine Aetna and Humana Inc. A trial on that merger begins next
week in the same Washington, D.C., courthouse.
The Anthem case has seen five days of court proceedings, and the
first phase of the case is expected to conclude this week. A second
phase of the case could begin later next month, on a second set of
arguments the government is making against the deal.
The department argues the mergers would unlawfully suppress
competition that has led to lower prices and better care. The
companies dispute this, saying the deals would produce consumer
benefits, including cost savings stemming from greater
efficiency.
The Anthem-Cigna case has turned into one of the more unusual
merger deals in recent years, as sharp tensions have arisen between
the two companies even as their push to link up moves forward.
Cigna officials privately accuse Anthem of misrepresenting their
company's role in a postmerger company, while Anthem complains that
Cigna has stopped cooperating on planning for the merger.
Anthem on Tuesday used multiple company witnesses to underline
its arguments against the Justice Department's case.
Two Anthem executives testified that the company is facing tough
competition as employers slice off parts of their health benefits
programs and give it to competing insurers. They also said Anthem
is facing competition from private exchanges: online
health-insurance marketplaces that let employers offer their
workers a range of plans.
Anthem's lawyers drew criticism from Judge Jackson, however, for
making some of the same points several times, including their
attempts to rebut Justice Department arguments that the merger
would reduce competition in the market for large national
customers.
Anthem lawyers throughout the trial have said there is no
industrywide definition of who counts as a national customer,
meaning there is no distinct and separate market for that
business.
When the company sought to elicit similar testimony Tuesday, the
judge interrupted, saying she'd already heard such statements
repeatedly and understood the company's position.
"I begged you to not do this again," Judge Jackson told an
Anthem lawyer. She said the company was slowing down the
proceedings by returning to topics that already had been well
covered.
Write to Brent Kendall at brent.kendall@wsj.com
(END) Dow Jones Newswires
November 29, 2016 19:15 ET (00:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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