How a judge can rule on Justice Department’s deal with CVS, Aetna

A federal judge is actually considering halting the integration of CVS Health along with Aetna — even though the two companies closed their merger last week.

Judge Richard Leon of the U.S. District Court for the District of Columbia in a hearing Monday floated the idea in which CVS along with Aetna keep their companies separate until he can determine whether the agreement the Justice Department struck with the companies clears anti-competitive concerns, according to a transcript of the hearing.

The judge pointed to concerns via groups, such as the American Medical Association, in which have urged regulators to block the deal, saying the combination might reduce competition along with leave consumers worse off.

The Justice Department in October said the item might require CVS along with Aetna to resolve overlap between their Medicare Part D plans in order to approve their roughly $70 billion deal. To satisfy these concerns, Aetna sold its business to WellCare Health Plans.

When the Justice Department strikes an agreement with companies, the deal must be cleared by a federal judge. This specific step has become somewhat procedural, with judges rarely questioning or opposing the terms. Companies typically don’t wait for a judge to rule before closing a deal. So while the item’s not unusual for CVS to have already completed its acquisition of Aetna, the item is actually unusual for a judge to consider keeping the companies via integrating while he completes his review.

“Unusual is actually almost too light of a word,” said Andrea Agathoklis Murino, a partner in along with co-chair of Goodwin’s antitrust along with competition law practice. “I can’t recall another instance of a judge doing This specific.”

Enacted in 1974, the Tunney Act slows the merger process along with adds a layer of oversight in cases where the Justice Department negotiates with the companies seeking to combine. The law created a 60-day comment period along with gave judges the final say on whether the agreements made are inside public’s best interest.

Under the law, judges can conclude in which the remedy proposed does not address anti-competitive concerns outlined inside complaint, said Jim Tierney, a partner in Orrick’s antitrust practice. They can’t, however, block the entire merger.

in which means inside CVS-Aetna case specifically, Leon can decide whether the agreement the Justice Department struck with CVS along with Aetna on their Medicare Part D businesses addresses anti-competitive issues, Tierney said. He can find the agreement sufficiently clears these concerns or not. If he finds the item does not, the companies can renegotiate with the Justice Department or appeal the ruling.

Leon on Monday said he might issue an order for CVS along with Aetna to keep their companies separate until he makes his ruling. He ordered the companies to submit filings by Dec. 14 along with called another hearing for Dec. 18.

CVS along with Aetna closed their roughly $70 billion deal on Nov. 28.

“CVS Health along with Aetna are one company, along with our focus is actually on transforming the consumer health experience,” CVS said in a statement.

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