Dec. 19A federal judge held off Tuesday on ruling whether CVS Health Corp. is prohibited from integrating with Hartford health insurer Aetna Inc. while he considers an antitrust settlement with the Justice Department giving the green light to the $69 billion deal, Bloomberg News reported.
U.S. District Judge Richard Leon in Washington deferred ruling until the U.S. Department of Justice responds to steps CVS has taken to keep the companies separate. He also indicated he'll support CVS measures that include operating Aetna as a separate unit and allowing the insurer to maintain control over pricing, Bloomberg reported.
CVS and Aetna completed the deal Nov. 28, but failed to win court approval for a settlement with the Justice Department intended to promote competition.
The hearing and additional time involved complicate CVS's plans to establish a dominant health care company with a stake in insurance, prescription drug benefits and drugstores across the U.S.
Leon set the hearing after saying recently the companies and Justice Department treated him like a "rubber stamp" and that he was "being kept in the dark" about the closing of the merger.
In court filings, CVS said government examinations of its Aetna deal were "more than robust."
"For nearly a full year prior to these settlement proceedings, the merger and its competition and public-interest impacts were extensively reviewed not only by the Department of Justice but also by 19 state attorneys general," the company said.
Addressing Leon's concerns about the antitrust aspects of the deal, CVS said it has taken steps to "maintain the separateness of certain aspects of Aetna's business."
The Justice Department cleared the deal in October after requiring the sale of Aetna's Medicare prescription drug plans to WellCare Health Plans Inc. to address the government's concerns that the merger would harm competition.
A federal law known as the Tunney Act requires court approval of settlements the Justice Department reaches with merging companies to resolve competition problems, but it doesn't prohibit companies from closing and merging operations as the settlement is considered.
Leon has said the Justice Department's concerns may have been too narrow.
In a court filing, the Justice Department said it's not necessary to keep the businesses separate given that the sale to WellCare is complete.
Thomas Greaney, a professor at the the University of California Hastings College of the Law and a Justice Department official, said so-called vertical mergers between two companies that produce separate services or components such as the CVS-Aetna tie-up have typically been approved with less trouble than horizontal mergers between companies in the same industry scrutinized for their potential to limit competition.
Doctors' and pharmacists' groups have criticized the CVS-Aetna deal, saying it limits choices for patients and consumers. "That's the ultimate concern here," Greaney said. "We've gone easy on vertical mergers."
The court approval process of merger settlements between the Justice Department and companies can take months, and companies routinely close their deals before a judge signs off.
Leon has faced off before with the Justice Department's antitrust division. The judge oversaw the division's unsuccessful challenge to AT&T Inc.'s takeover of Time Warner. During the trial, he criticized the government's lawyers for their handling of the case.
Shares of CVS fell 1.6 percent, closing at $69.55.
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