WEBVTT - Anthem Seeks Extension for Court Order Blocking Cigna (Audio)

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<v Speaker 1>The proposed marriage of Anthem and Signa hasn't hasn't exactly

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<v Speaker 1>been true love. It was supposed to be a forty

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<v Speaker 1>eight billion dollar deal that would create the largest US

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<v Speaker 1>health insurer. Instead, it produced two court decisions blocking the

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<v Speaker 1>acquisition and prompted the companies to to accuse one another

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<v Speaker 1>of harassment and sabotage. The merger may or may not

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<v Speaker 1>be dead, but the legal fight is sure alive. Last week,

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<v Speaker 1>Anthem asked the Supreme Court to intervene, saying a federal

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<v Speaker 1>appeals court used outdated economics and ruling against the deal.

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<v Speaker 1>And today the two companies are appearing in state court

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<v Speaker 1>in Delaware, where Anthem is trying to stop Signa from

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<v Speaker 1>withdrawing from the agreement with US. To sort all this

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<v Speaker 1>out is Jennifer Ree, Bloomberg Intelligence Senior litigation analyst. Jennifer,

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<v Speaker 1>thanks as always for joining us. So usually when you

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<v Speaker 1>have companies that are trying to to merge and an

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<v Speaker 1>I trust enforcers block a deal, your suit of block

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<v Speaker 1>a deal in the federal court, UH says yes, I'm

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<v Speaker 1>going to block the deal. The companies give up, they

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<v Speaker 1>walk away. Why has this deal been different than that?

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<v Speaker 1>That's a really good question. Uh, it's a little bit

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<v Speaker 1>hard to understand in some ways anthem strategy here, UM,

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<v Speaker 1>But yes, that's usually the case. They they don't usually

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<v Speaker 1>go quite this far. And I think that here, you know,

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<v Speaker 1>Anthem obviously feels very strongly about its efficiencies argument, which

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<v Speaker 1>is a different efficiencies argument, I think than is usually

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<v Speaker 1>made in a merger case, more more complicated than usual.

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<v Speaker 1>And by saying that, UM, I should go back and

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<v Speaker 1>say that that efficiencies based on the guidelines that the

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<v Speaker 1>government uses to weigh mergers and whether or not they

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<v Speaker 1>violate antitrust laws, they are supposed to take into account

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<v Speaker 1>efficiencies that could be generated by the merger that might

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<v Speaker 1>offset anti competitive effects that could occur via the merger,

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<v Speaker 1>and if those efficiencies could offset those effects and outweigh

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<v Speaker 1>those effects, the merger doesn't violate antitrust laws. And I

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<v Speaker 1>think Anthem believes they have a strong argument here that

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<v Speaker 1>that is the case. Obviously, the district court rejected that position, um,

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<v Speaker 1>as did the appellate court. And they also have a

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<v Speaker 1>situation where they have to pay an almost two billion

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<v Speaker 1>or break up for failure to getting antitrust clearance, well

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<v Speaker 1>two billion dollars jen that could have something, Yes, their

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<v Speaker 1>desire to keep litigating this, but um, you know, it's

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<v Speaker 1>hard to get the Supreme Court to hear a case

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<v Speaker 1>even if you think the lower court is wrong. And

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<v Speaker 1>you know, very few surgery reputations are actually granted by

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<v Speaker 1>the court. Their doc is relatively small as a percentage

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<v Speaker 1>of the number of cases that people ask them to hear. Why,

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<v Speaker 1>you know, what is Anthem's hook here? What do they what?

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<v Speaker 1>What is it that they are trying to argue will

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<v Speaker 1>be really persuasive to get the court to here the case?

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<v Speaker 1>You know, I think they're trying to argue that there

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<v Speaker 1>was a misapplication of the law and and and that

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<v Speaker 1>the Supreme Court precedent as it stands on mergers and

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<v Speaker 1>particularly the application of efficiencies in the analysis, is outdated

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<v Speaker 1>and doesn't align with the actual thought process or the

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<v Speaker 1>or the way that that the circuit courts have ruled

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<v Speaker 1>that mergers should be looked at today, you know. And

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<v Speaker 1>the thing is, it could be an interesting argument for

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<v Speaker 1>the Supreme Court, but I don't really believe that that's

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<v Speaker 1>what happened here in the district court and the appellate decision.

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<v Speaker 1>I think that's how they're trying to to, you know,

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<v Speaker 1>cast it in order to get the Supreme Court to

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<v Speaker 1>pick it up. But Michael, I, I just I'm gonna

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<v Speaker 1>say it. Maybe I'll be wrong, but I don't see

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<v Speaker 1>the Supreme Court picking up this case. Well, it would

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<v Speaker 1>certainly be interesting if they did. The Supreme Court hasn't

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<v Speaker 1>ruled in a merger case since I believe in nineteen

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<v Speaker 1>seventy four, so it would certainly be an area of

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<v Speaker 1>the law that they haven't addressed in a while. UM Gent,

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<v Speaker 1>let me turn to what's going on in Delaware today.

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<v Speaker 1>There's a proceeding before I judge there right now. Just

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<v Speaker 1>explain to us what is what is happening there, what

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<v Speaker 1>what the companies are are each seeking. Sure, so, what

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<v Speaker 1>happened here is that UM Anthem had the ability at

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<v Speaker 1>one point in time to extend the termination date in

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<v Speaker 1>the merger agreement to April thirty. I don't remember what

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<v Speaker 1>the date that was triggered. I think it might have

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<v Speaker 1>been February and um they had the unilateral ability to

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<v Speaker 1>do that. They didn't need signals, okay on that, And

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<v Speaker 1>before that happened, SIGNA actually tried to enjoin them, tried

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<v Speaker 1>to get a declaratory action that they that they Anthem

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<v Speaker 1>had breached the agreement and could therefore not trigger that

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<v Speaker 1>extension date that April thirty date. And the Court said, no,

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<v Speaker 1>that's not the case. They can trigger it, and they

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<v Speaker 1>went ahead and did it. And the court also enjoined

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<v Speaker 1>SIGNA from terminating the agreement, you know, before April thirty.

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<v Speaker 1>Now that date has passed, they are still enjoined. So

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<v Speaker 1>today I believe that there is a hearing where they're

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<v Speaker 1>going to decide. The court will decide um or listen

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<v Speaker 1>to arguments as to whether that temporary injunction temporary restraining

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<v Speaker 1>order should be lifted and whether or not Signal should

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<v Speaker 1>be able to terminate this agreement. Well, what, you know,

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<v Speaker 1>what are the consequences here? Because one with one could

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<v Speaker 1>see an argument that, well, look, what's the big deal.

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<v Speaker 1>The Supreme Court is going to hear the case, just

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<v Speaker 1>keep the injunction going. But it's not quite so simple

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<v Speaker 1>for SIGNA if the injunction stays in effect, right, absolutely, right?

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<v Speaker 1>I think what really complicates things here certainly we might know,

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<v Speaker 1>we might know if the Supreme Court is going to

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<v Speaker 1>pick this case up, let's say, by October or just

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<v Speaker 1>after October but what really complicates things is that companies

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<v Speaker 1>that are being acquired when they're in this period of

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<v Speaker 1>limbo as a mergers being considered definitely suffer harm to

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<v Speaker 1>the market. You know, I'm sure Signa has an argument

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<v Speaker 1>here that it's difficult to renew contracts, that they lose customers,

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<v Speaker 1>they perhaps might even lose employees. And it's already been

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<v Speaker 1>in limbo for almost two years, so you know, it's

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<v Speaker 1>no easy decision to just say, Hey, the court's going

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<v Speaker 1>to decide in October whether to pick this up, let's

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<v Speaker 1>just keep this thing enjoined, and let's just you know,

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<v Speaker 1>keep Signa in limbo here. Not to mention the fact

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<v Speaker 1>that even if the court picks it up, you need

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<v Speaker 1>to hear it, you need a decision, and there's a

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<v Speaker 1>good chance to the Supreme Court would demand the case

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<v Speaker 1>to distrect court. So we're talking a few years, not

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<v Speaker 1>just October, Jennifer. There's been so much rancor between the

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<v Speaker 1>two companies in in this deal, I mean, really a

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<v Speaker 1>remarkable level of accusations going each direction. If somehow this

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<v Speaker 1>deal could go through, um, is this a company that

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<v Speaker 1>would be uh sort of you know, permanently scarred a

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<v Speaker 1>combined company that would be scarred by by all that

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<v Speaker 1>went into this this uh legal fight. Well, you know,

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<v Speaker 1>it's hard to say. I think that if it did

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<v Speaker 1>go through and they emerged it with their performance would

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<v Speaker 1>have to bear out what they say it would be.

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<v Speaker 1>I mean, the district court judge certainly felt that the

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<v Speaker 1>rancor would affect their ability to integrate and their ability

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<v Speaker 1>to achieve some of the efficiencies they argued they could achieve.

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<v Speaker 1>But if they actually did merge and they were able

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<v Speaker 1>to achieve those efficient efficiencies, lower costs for their large

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<v Speaker 1>company customers as well as let's say, what what's considered

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<v Speaker 1>the signa more innovative, better product, Well, then I suppose

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<v Speaker 1>the marketplace would would accept that and be happy with that. Well, Jenn,

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<v Speaker 1>you have to take us through a bit. You know.

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<v Speaker 1>Let's say somehow they managed to persuade the court to

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<v Speaker 1>take the case. The court prints of back and the

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<v Speaker 1>kid puts it back together. Uh, it goes through. You know,

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<v Speaker 1>what is Anthem really saying the benefits are of doing

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<v Speaker 1>this merger. What Anthem is saying is that the customers

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<v Speaker 1>that the district Court claimed would be harmed by this

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<v Speaker 1>merger were the large customers, customers that have employees in

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<v Speaker 1>several states across the country, sort of coast to coast,

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<v Speaker 1>even if they're out in every state that might use

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<v Speaker 1>that would use Anthem or signa UM as their administrative

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<v Speaker 1>services claims administrator that they're fully ensured, like Bloomberg for example,

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<v Speaker 1>But would you would use these companies to administer these

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<v Speaker 1>to negotiate provider rates and then there they pay those

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<v Speaker 1>provider rates for their employees. And Anthem is claiming that

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<v Speaker 1>it would be able to lower those provider rates and

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<v Speaker 1>it would be an immediate pass through to its customers

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<v Speaker 1>like Bloomberg because their employee, you know, Bloomberg, is then

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<v Speaker 1>reimbursing lower rates. I want to thank our guest, Jennifer Rees,

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<v Speaker 1>Senior Analysts, senior litigation analyst at Bloomberg Intelligence, walking us

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<v Speaker 1>through the many aspects of the Anthem Signa merger and

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<v Speaker 1>the legal fight over that