WEBVTT - Bloomberg's Rie on US Antitrust Suits Against ANTM, AET (Audio)

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<v Speaker 1>Global business news twenty four hours a day. If Bloomberg

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<v Speaker 1>I'm Charlie Pellett. The Dallas higher, SMP and NESTAK lower.

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<v Speaker 1>the first Word Breaking news desk for today's afternoon call,

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<v Speaker 1>and here is Bill Maloney. Good afternoon, Charlie. Quiet day

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<v Speaker 1>for the Dow in SMP, with the Dow currently higher

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<v Speaker 1>by nine points, STPs down five will, the NASDAK drops

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<v Speaker 1>twenty two, the small cap six hundred is lower by

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<v Speaker 1>four points, and the US ten yield at one point.

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<v Speaker 1>All tennis sectors are lower, led by losses in materials,

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<v Speaker 1>energy and telecom down, Transports drop twenty as a biotech

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<v Speaker 1>Sinc Thirty nine, and the VIX is higher by one

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<v Speaker 1>point five percent. Down leaders included Mike McDonald's J and

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<v Speaker 1>J and Boeing, Microsoft, and Goldman Sachs led to the downside.

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<v Speaker 1>Netflix plunged fourteen percent after earnings, Philip Moore sank three

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<v Speaker 1>percent after reporting, while vm Ware jumped as much as

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<v Speaker 1>ten point eight percent following its results. Some of the

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<v Speaker 1>names pointing after the Belts and I included Intuitive Surgical,

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<v Speaker 1>Marvel Technology, Microsoft, and United Continental as emits for Microsoftware

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<v Speaker 1>for fifty eight cents on revenues of twenty two point

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<v Speaker 1>one three billion. Live in the first breaking news desk

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<v Speaker 1>on Bill Maloney, Charlie all right, thank you very much,

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<v Speaker 1>Bill Maloney in to hear live breaking news over your

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<v Speaker 1>Bloomberg Times Squawk squ a w K on your terminal.

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<v Speaker 1>I'm Charlie Peloton. That's a Bloomberg business flash you're listening

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<v Speaker 1>to taking start with Kathleen Names and Pim Fox on

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<v Speaker 1>Bloomberg Radio. The shares of ETNA are down nearly three

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<v Speaker 1>percent today, Anthem shares down two percent, a Signa Corpet

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<v Speaker 1>down two percent, Humanity down three and three quarters of

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<v Speaker 1>a percent. Why while the Justice Department close to challenging

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<v Speaker 1>Anthems proposed acquisition of Signa and Etness plan combination with Humanity,

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<v Speaker 1>This took all according to people familiar with the matter.

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<v Speaker 1>Here to tell us more, Jennifer relitigation analyst Bloomberg Intelligence.

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<v Speaker 1>Bloomberg Intelligence provides unique real time research and context on

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<v Speaker 1>a variety of industries, as well as all market and

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<v Speaker 1>government factors that affect businesses. Our terminal customers can access

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<v Speaker 1>this function at b I go. Jennifer, thanks for coming in.

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<v Speaker 1>Appreciate it all, right, so tell us maybe give us

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<v Speaker 1>an update about what has been going on. It's been

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<v Speaker 1>going on for a long time. I think more than

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<v Speaker 1>a year, right, Well, first, thanks for having me really

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<v Speaker 1>appreciate it. Um, this has been going on for more

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<v Speaker 1>than a year as a matter of fact. Second, request

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<v Speaker 1>for information, which are really just the in depth sort

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<v Speaker 1>of subpoena that the d o J issues to parties

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<v Speaker 1>to investigate deals, were issued to both of these in

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<v Speaker 1>both of these murders last July. So we're talking about

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<v Speaker 1>a full year investigation. But nowadays that's not unusual for

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<v Speaker 1>big complex mergers that are likely going to need remedies

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<v Speaker 1>or actually be problematic, which it is beginning to look

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<v Speaker 1>like these will be. Use the word remedy and I

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<v Speaker 1>want to maybe you can define what that what that describes.

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<v Speaker 1>So essentially, when the DJ or the FTC investigates a

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<v Speaker 1>deal and they think Trade Commission, Federal Trade Commission, yes,

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<v Speaker 1>sorry about that, And they think that some aspect of

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<v Speaker 1>a merger could have a bad effect, could cause a

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<v Speaker 1>lack of innovation or increased prices, they first look to

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<v Speaker 1>see whether there's something that can be done, some piece

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<v Speaker 1>of one of the businesses, let's say, that can be

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<v Speaker 1>sold off to another competitor to replace the competition that

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<v Speaker 1>would be lost by virtue of the merger. If that

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<v Speaker 1>can be done, and it can be done to their

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<v Speaker 1>the regulators satisfaction, then the larger deal, the underlying deal

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<v Speaker 1>can usually go ahead and some small piece of business

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<v Speaker 1>is sold off and that's usually called a remedy. It's

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<v Speaker 1>fixing whatever the problem is. So I have none of

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<v Speaker 1>the company has been able to fix the problem. Is

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<v Speaker 1>this what is at stake? Well, it looks like that's

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<v Speaker 1>the direction this is going in. We we have heard

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<v Speaker 1>a lot about Etna and Humanita trying to fix the

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<v Speaker 1>issues that they may have in an overlap in medicare advantage.

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<v Speaker 1>They do, they do. They are both active in that

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<v Speaker 1>area which is looked at locally by the Department of Justice,

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<v Speaker 1>and a lot of us thought that there may be

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<v Speaker 1>a way for them to sell off in different counties

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<v Speaker 1>where they have overlaps to sell off those plans. Now

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<v Speaker 1>they really overlap across the country a lot in medicare advantage,

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<v Speaker 1>and it would have taken a significant number of divestitures,

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<v Speaker 1>and that may be the sticking point here. On the

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<v Speaker 1>other deal, it was less clear how that problem, the

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<v Speaker 1>problems there could be remedied. And the reason there's be

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<v Speaker 1>has Anthem and Signa really compete more in a national

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<v Speaker 1>In a national scale, they offer administrative services for large

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<v Speaker 1>companies that self ensure um and a lot of these

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<v Speaker 1>large companies, like what we saw in the Stables deal,

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<v Speaker 1>and like what we saw in in the Cisco US

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<v Speaker 1>Food seal, like one entity or even two with which

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<v Speaker 1>they can contract contract across the country for all of

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<v Speaker 1>their divisions and branches. And it's harder to see how

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<v Speaker 1>you might fix the significant overlap those two companies have

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<v Speaker 1>in administrative services. So this is all about competition right exactly. Now,

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<v Speaker 1>as far as the companies are concerned, can they then

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<v Speaker 1>appeal the decision whatever that may or may not be

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<v Speaker 1>from the Justice Department. Oh, of course, from here it

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<v Speaker 1>goes into practically, you know, essentially litigation. The Department of

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<v Speaker 1>Justice does not have the power to block a merger

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<v Speaker 1>that it thinks is anti competitive or we'll have do

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<v Speaker 1>will cause harm to the market. The Department of Justice

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<v Speaker 1>has to ask a judge to issue in order blocking

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<v Speaker 1>the deal. And that's what we're hearing now that Bloomberg

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<v Speaker 1>News basically has reported that they're hearing that the Department

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<v Speaker 1>of Justice is ready to go to court to ask

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<v Speaker 1>a judge to or judges since it's two deals to

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<v Speaker 1>block these deals. Um, and what they have to do

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<v Speaker 1>is win in court, so you still have a possibility

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<v Speaker 1>a that the parties can settle these matters. Um. This

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<v Speaker 1>has happened sometimes after a complaint is filed or be

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<v Speaker 1>that the Department of Justice loses in court, which also

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<v Speaker 1>sometimes happens. The deals are not the same, just to

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<v Speaker 1>be clear, right right, don't want I mean, even though

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<v Speaker 1>we're talking about healthcare deals. I mean, for example, the

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<v Speaker 1>Anthem Signet deal would be a forty eight billion dollar deal,

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<v Speaker 1>and that would create a health insurer with what like

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<v Speaker 1>fifty four million members and a hundred and seventeen billion

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<v Speaker 1>dollars in annual revenue. Right, Yes, that's a much bigger deal,

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<v Speaker 1>and I think all along, even a year ago, a

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<v Speaker 1>lot of analysts expected that deal to have more trouble

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<v Speaker 1>getting through the d o J than the smaller Ethnic

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<v Speaker 1>Humanity deal, which is not only smaller but different in

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<v Speaker 1>nature in the way those two companies compete. Yeah, that's

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<v Speaker 1>about a lot about the medicare plans correct, All right, Well,

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<v Speaker 1>you're gonna have to keep us up to date on

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<v Speaker 1>what goes on. Thank you very much, absolutely, thank you.

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<v Speaker 1>Jennifer Ree, litigation analyst for Bloomberg Intelligence of Bloomberg Intelligence

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<v Speaker 1>providing unique real time research and context on a variety

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<v Speaker 1>of industries and all markets and government factors that affect businesses.

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<v Speaker 1>Our terminal customers can access this function by typing b

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<v Speaker 1>I go, I'm pim Fox and this is Bloomberg. Bloomberg

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