## Facts

- Anthem, Inc. agreed to acquire Cigna Corporation in a transaction valued at roughly $54 billion.
- The merger would combine two of the four largest commercial health insurers and two major sellers of commercial health insurance to large employers, including “national accounts” (employers with more than 5,000 employees across multiple states).
- The United States, eleven states, and the District of Columbia sued under § 7 of the Clayton Act to permanently enjoin the merger.
- After a bench trial, the district court found the merger likely to substantially lessen competition in (1) the sale of commercial health insurance to national accounts in fourteen Anthem “Blue” states and (2) the sale of commercial health insurance to large-group employers in the Richmond, Virginia area.
- Anthem’s principal defense relied on asserted merger efficiencies: applying Anthem’s lower provider reimbursement rates to Cigna’s business to produce large medical-cost savings that would be passed through to customers.
- The district court rejected Anthem’s efficiencies showing as not adequately feasible or supported and entered a permanent injunction barring the merger.
- Anthem (and nominally Cigna) appealed to the D.C. Circuit.

## Issues

1. Whether the government proved that the proposed merger was likely to substantially lessen competition in violation of § 7 of the Clayton Act in the national-accounts market in fourteen Anthem states and the large-group market in Richmond, Virginia.
2. Whether Anthem rebutted the government’s prima facie showing by proving merger-specific, verifiable efficiencies sufficient to prevent likely anticompetitive effects.

## Decision

- The D.C. Circuit affirmed the permanent injunction enjoining the merger.
- The court held that the government established a strong prima facie case of likely anticompetitive effects based on structural evidence showing increased concentration in already highly concentrated relevant markets.
- The court concluded Anthem failed to rebut the presumption because its claimed medical-cost efficiencies were not shown to be achievable at the scale asserted and were insufficiently verifiable and consumer-benefiting.
- The court deferred to the district court’s factual findings that implementation of the proposed repricing strategy was uncertain, contractually and practically constrained, and could produce quality-of-care concerns.
- Judge Kavanaugh concurred in part and dissented in part, but the majority’s affirmance controlled.

## Legal Principles

- Under § 7 of the Clayton Act, a merger is unlawful if its effect “may be substantially to lessen competition” in any relevant line of commerce.
- A prima facie case of likely competitive harm may be shown through market definition and market-concentration evidence; high concentration and significant increases in concentration support a presumption of anticompetitive effects.
- The burden shifts to defendants to rebut the presumption with evidence such as entry, repositioning, or efficiencies; the analysis remains a flexible, totality-of-the-circumstances inquiry.
- Merger efficiencies, to carry rebuttal weight, must be merger-specific and verifiable and must be shown likely to prevent the merger from being anticompetitive, not merely plausible.
- Courts may reject efficiencies that are speculative, difficult to implement, dependent on uncertain contractual or market responses, or not shown likely to benefit consumers on net (including where asserted savings could reduce quality).

## Conclusion

The D.C. Circuit upheld the injunction blocking Anthem’s acquisition of Cigna because the merger was presumptively anticompetitive in the relevant markets and Anthem did not prove merger-specific, verifiable efficiencies sufficient to overcome the government’s showing of likely harm to competition.


United States v. Anthem, Inc., 855 F.3d 345 (D.C. Cir. 2017)