Anthem sees Trump’s DOJ as its wingman
It reads like an ugly divorce. Court records show two former partners accusing each other of lies and sabotage.
But despite those revelations, one side refuses to give up.
In this failed relationship, it’s Anthem holding out hope that despite a preliminary injunction and an unwilling partner standing in the way, its $54 billion merger with Cigna Corp. will be approved by a new U.S. Justice Department under the Trump administration.
Official court documents show that Anthem sees this “new DOJ” led by recently appointed Attorney General Jeff Sessions as the merger’s way forward.
“Our interest has been at the outset to merge. We reinitiated it over resistance. And here we are, later in the game, and we’re fighting for it. And we’re reaching out to DOJ, which is new,” Anthem attorney Glenn Kurtz said of the merger, according to transcripts from a recent teleconference between the two insurers and J. Travis Laster, a judge in Delaware’s Court of Chancery who granted a temporary restraining order preventing Cigna from terminating the deal.
It reads like an ugly divorce. Court records show two former partners accusing each other of lies and sabotage.
Kurtz pointed out that Vice President Mike Pence supported the controversial merger when he was governor of Indiana, suggesting that Indianapolisbased Anthem hopes the White House can influence Justice Department officials. Indiana insurance regulators gave the Anthem-Cigna deal a thumbsup last May.
Anthem argued for the temporary restraining order enjoining Cigna from killing the merger agreement on the grounds that Anthem wouldn’t be able to “negotiate a settlement, with or without divestitures, with (a) new DOJ” if there were no merger deal to negotiate.
While Cigna argued that the deal is dead and impossible to resurrect, Anthem nevertheless was able to convince the court that it stands a chance under the new administration.
“This is a year where the new administration that Mr. Kurtz wants to deal with was not predicted by virtually any political pundit to be the administration that Mr. Kurtz would be dealing with,” said Laster, who is notoriously tough on business mergers. “I don’t think that … this is the year in which someone can reasonably posit … that there is no chance for this merger to get approved.”
Earlier this month, a U.S. District Court judge blocked the Anthem-Cigna merger, saying it would harm competition nationally. Some legal experts predict a DOJ under billionaire President Donald Trump will be more lenient when it comes to antitrust matters than the Obama administration was. While Trump has not yet appointed anyone to lead the Justice Department’s antitrust division, his transition team members signal a return to a hands-off approach to antitrust enforcement.
Former Antitrust Division Deputy Assistant Attorney General David Higbee and former Federal Trade Commission member Joshua Wright—whom Trump selected as antitrust advisers— seem to place more trust in the markets than in government’s ability to preserve competition, for example. In an op-ed for the New York Times, Wright criticized the Obama administration’s “anti-merger fervor.”
Former Anthem lobbyist Makan Delrahim, who lobbied Congress on antitrust issues related to the Cigna merger and was recently hired as Trump’s deputy counsel, is being considered for the top antitrust job in the Trump administration, several media outlets reported.
Also, Trump has shown a willingness to get involved in corporate dealmaking. In January, then-President-elect Trump met with the CEOs of Monsanto and Bayer to discuss their proposed $66 billion deal to form an agribusiness giant. White House press secretary Sean Spicer announced that the combined company would create thousands of jobs, and Trump tweeted support.
The situation worried antitrust experts, but gave health insurers hope that antitrust hurdles would become easier to mount under this new administration. Still, Sessions said during his confirmation hearing that he wouldn’t hesitate to enforce antitrust law and there would “not be political influence in this process.”
But antitrust attorneys say even with a government more permissive toward big mergers, there’s little chance the Anthem deal will close, especially since Anthem and Cigna themselves are on such unfriendly terms.
Anthem has claimed that Cigna tried to sabotage the merger at every turn. And Cigna has gone so far as to allege that Anthem—knowing the merger faced impossible odds—attempted to undermine Cigna as a competitor and steal away its customers, according to Cigna’s complaint filed in court.
Cigna’s lawyer claimed that Anthem “wants to keep Cigna on ice” so it will have one less competitor. But Cigna said there’s no way the deal will gain approval before the agreement’s April 30 deadline, and so, Cigna should be allowed to go free.
Matthew Cantor, a partner at law firm Constantine Cannon, said he doesn’t see any way to remedy the lost competition that would result from the merger. Moreover, even if the Trump administration agreed to clear the merger, Anthem would still have to win over 11 states that also sued to block the deal.
The next step is a hearing in early April to determine if Cigna can lawfully terminate the merger agreement.