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The planned $48.4bn acquisition of Cigna by rival US health insurer Anthem has been blocked by a federal judge, marking the second time in as many weeks US courts have knocked back a takeover in the industry on competition grounds.

US District Judge Amy Berman Jackson in Washington ruled late on Wednesday that the effect of the tie-up between Anthem and Cigna “may be ‘substantially to lessen competition’” in “what is already a highly concentrated market”, particularly in the market for the sale of commercial health insurance to “national accounts” – customers with more than 5,000 employees, typically spread over two or more states.

The ruling follows US District Judge John Bates’ decision in Washington DC late last month to block Aetna’s $37bn takeover of rival Humana, also on the grounds that deal would reduce competition.

Judge Jackson noted that the claimed medical cost savings, championed in particular by Anthem, were not “merger-specific, they are not verifiable, and it is questionable whether they are ‘efficiencies’ at all.”

The merger, first announced in 2015, between Anthem and Cigna – the second- and third-largest medical insurers in the US – has been on shaky ground for months. A filing from the Department of Justice in September revealing the two companies had been trading accusations of breaching deal terms.

The knock-back now sets up Anthem to pay a $1.85bn break fee to Cigna.

Copyright The Financial Times Limited 2017. All rights reserved.
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