According to CVS Health Corp., its acquisition of Aetna Inc. closed on Nov. 28 after receiving the last required approval from a state regulator. But a federal judge appears to have other ideas.
In a hearing on Dec. 3, Judge Richard Leon of the U.S. District Court for the District of Columbia said he might halt CVS and Aetna’s integration efforts while he reviews the $69 billion deal, according to The Wall Street Journal.
Though the Department of Justice approved the transaction in October — contingent upon Aetna selling off its stand-alone Medicare Part D assets — Leon has the authority to review that settlement, through a statute known as the Tunney Act, to ensure that the proposed remedy for any antitrust issue is in the public interest.
Following a Dec. 3 hearing in which he expressed skepticism about the DOJ’s settlement, Leon ordered the parties involved in the case to “show cause why I should not order CVS to hold its acquired Aetna business as a separate entity and to insulate the management of the CVS business from the management of the Aetna business, and vice versa, until I have made my determination as to whether to enter final judgment in this case,” according to court documents. Written arguments are due by Dec. 14, and Leon plans to hold a hearing on Dec. 18.
So can a federal judge actually halt an acquisition that the DOJ has already approved?
“I don’t believe the Tunney Act extends that far,” antitrust attorney James Burns of Akerman LLP tells AIS Health via email. “The reason why I say that is because, under the Tunney Act, the issue before him is the sufficiency of the remedy that the parties have agreed to, and whether it serves the public interest, not whether the merger itself should be enjoined.”
Thus, Burns says he’s confident that Leon will ultimately approve the CVS/Aetna transaction, as he’s not aware of any case where a federal judge, in the end, rejected a merger settlement that the DOJ proposed.