Advocacy on consumer healthcare competition issues aimed at lowering prescription drug costs
Quick take: DOJ's deadly blow
December 8, 2016
Yesterday at the Aetna-Humana trial, the Justice Department attempted to show that the two insurers were not only giants, but each other's closest competitor. If it works, this tactic is very powerful. Allowing companies to merge with their closest competitor is the quintessential example of lost competition in the market. Above a certain market share, elimination of close competitors is the most definitive presumptively unlawful horizontal merger.
The recent case of Staples and Office Depot shows this type of argument in practice. Like Aetna and Humana, Staples and Office Depot did not purport to make different products or operate in different geographies. Rather, their most recent merger case (there was a different one in the past) relied on putting Amazon's office supply sales in the relevant market definition. The DOJ was able to effectively show that the market definition was more narrow AND that the two were each other's closest competitors. The latter was the deadly blow.
In Aetna, the Amazon-like player is Original Medicare. While "OM" is a similar product to Medicare Advantage, in every past health insurance merger case involving Medicare, Medicare Advantage is always held as a separate market. By setting up the story of close competition between these large actors, DOJ is positioning itself for that deadly blow when the judge accepts their version of the market definition.