United States v. Aetna Inc. - 240 F. Supp. 3d 1 (D.D.C. 2017)

Rule:

Section 7 of the Clayton Act prohibits mergers where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly. 15 U.S.C.S. § 18. By using the word "may," Congress indicated that its concern was with probabilities, not certainties. Hence, mergers with probable anticompetitive effects are prohibited by the Clayton Act. The government need not prove the alleged anticompetitive effects with certainty. Second, the Clayton Act protects competition, rather than any particular competitor. To assess a merger's probable effect on competition, the court must undertake a comprehensive inquiry into the future competitive conditions in a given market.

Facts:

Before the court is an antitrust challenge to the merger of Aetna Inc. and Humana Inc., two of the largest health insurance companies in the country. Following an investigation, the Department of Justice, eight states, and the District of Columbia (collectively, government) filed this action asserting that the merger "may . . . substantially . . . lessen competition" in violation of section 7 of the Clayton Act, 15 U.S.C. § 18, in two distinct product lines: individual Medicare Advantage plans and individual commercial health insurance plans offered on the public exchanges. Moreover, the government argued, additional evidence indicates that the companies compete head-to-head in both markets—competition that would be lost following the merger, to the significant detriment of consumers. In response to the government's public exchange allegations, Aetna and Humana argued that there is no current competition between the two companies. If there is no current competition between them, they argue, there can be no substantial lessening of that competition post-merger. Alternatively, they argue that even if the Court looks back to the competition between Aetna and Humana in 2016 and predicts future competition on that basis, it is likely that Humana's market share in the public exchanges will be so reduced in 2017 and later years that a merger would not increase market concentration to a presumptively unlawful level. Additionally, Aetna and Humana argued that the efficiencies created by the merger and then passed on to consumers would counteract any anticompetitive effects in both the Medicare Advantage and public exchange markets.

Issue:

Should the proposed merger of Aetna and Humana, two of the largest health insurance companies in the country, be enjoined?

Answer:

Yes.

Conclusion:

The court held that the proposed merger of two of the largest health insurance companies in the country was enjoined under § 7 of the Clayton Act, 15 U.S.C.S. § 18, because the proposed merger was likely to substantially lessen competition in Medicare Advantage in all 364 complaint counties and in the public exchanges in the three complaint counties in Florida. The companies competed in a Medicare Advantage product market that did not include Original Medicare, and in that market, the merger was presumptively unlawful. Because one of the companies was likely to offer plans on the exchanges only in the three complaint counties in Florida in 2018 and beyond, the merger was likely to substantially lessen competition in those counties, and the companies' proffered efficiencies did not offset the anticompetitive effects of the merger.