DOJ: Proposed healthcare mergers not healthy for economy

In Business Organizations by Coolidge Wall

In this blog, we have discussed the various complexities and legal challenges that are presented when a company attempts to acquire or merge with another company. In this post, we noted that vast majority of these deals are approved. In fact, just 5 percent of filings for mergers lead to challenges from agencies like the Department of Justice.

While they may be rare, these challenges do happen; when they do, they are often newsworthy events. For example, recently, the DOJ filed lawsuits to stop two mergers in the healthcare insurance industry. The two separate transactions would combine the third- and fifth-largest insurance companies as well as the second- and fourth-largest companies. Both proposed mergers have gotten some pushback from the DOJ.

According to news reports, the result of the mergers would diminish the market competition considerably. Rather than having a field of five major insurance companies, consumers would have a choice between just three.

This consolidation, according to attempts to block the mergers, would negatively impact consumers and the marketplace. And while industry leaders say the transactions are necessary to keep their costs down, others argue that consolidating is unnecessary and ultimately bad for consumers.

The decisions regarding these mergers will be left in the hands of a federal court.

In many cases, proposed acquisitions and mergers do not see this kind of opposition. However, should these transactions come under scrutiny, it will be crucial for business owners to be prepared to support their case.

Whether your company is looking to merge with another company or is going to be acquired, it is possible that the deal will be put under the antitrust microscope. Consulting an attorney prior to making or proposing any deals can help you position yourself and your company for success.

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