Home / World News / CVS-Aetna deal may hinge on antitrust approach under Trump – The Denver Post

CVS-Aetna deal may hinge on antitrust approach under Trump – The Denver Post

CVS Health Corp.’s $67.5 billion takeover of Aetna Inc. will test the Trump administration’s approach to far-reaching corporate takeovers, just weeks after the U.S. government sued to block a major telecommunications merger.

The health-care deal unveiled Sunday would create an industry giant with over $240 billion in annual sales with a hand in insurance, prescription drug plan administration, retail pharmacies and corner clinics. The companies said the combination will save $750 million in costs and bring consumers better, more efficient health care.

In the past, deals combining companies up and down a chain of business — such as a supplier and a distributor — have been viewed as posing less anticompetitive risk than combinations of direct rivals. Last month, however, the Justice Department sued to block just such a “vertical” merger between AT&T Inc. and Time Warner Inc., saying it would harm consumers and limit their media content options.

“We are obviously going to get some scrutiny,” Aetna Chief Executive Officer Mark Bertolini said Sunday. “We are prepared to deal with whatever comes along to make this work.”

Aetna shares were down less than 1 percent to at $180.71 at 11:27 a.m. in New York. That’s below CVS’s $207-a-share offer for the company and a sign investors are skeptical the deal will close at the current price.

CVS was down 5.3 percent to $71.13.

How much scrutiny the deal gets from the government may depend on which federal agency reviews the takeover — the Justice Department, or the Federal Trade Commission.

Both scenarios present obstacles.

The FTC has typically handled mergers of retail businesses like CVS. While it allowed Walgreens Boots Alliance Inc. to buy more than 1,900 Rite Aid Corp. stores earlier this year, the deal had to be significantly scaled down to gain the regulator’s approval. The Justice Department, meanwhile, successfully sued to block insurance mergers between Anthem Inc. and Cigna Corp, and Aetna and Humana Inc.

In the past, vertical deals have typically won approval after companies agree to restrictions on how they operate.

That may be changing. The Justice Department’s new antitrust chief, Makan Delrahim, has criticized past settlements that allowed vertical deals with behavioral restrictions. In a speech last month, Delrahim said such conditions don’t work and force antitrust enforcers to become regulators.

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