1

INTERNATIONAL COMPANY LAW

TAKE HOME FINAL EXAM
EVREN SAHIN 967775
1 What is the function of (a) the merger, (b) Exchange of
Certificates, (c) Representations and Warranties of Anthem and
Cigna ( as well as of Anthem and Merger Sub), (d) Covenant
Relating to the Conduct of Business, (e) Conditions to
Consummation of the Merger, (f) Conditions Precedent, (g)
Termination and Amendment, (h) General Provisions, and how do
these provisions work together (please give examples from each
sub-section to justify your answer)?
(a) In a merger agreement, the assets and liabilities of the firm which is
being acquired end up being absorbed by the buyers firm. A merger could
be the most effective and efficient way to enter a new market1 without the
need of creating another business entity. For the firms who have been
functioning in their industry for a while, a merger creates new paths for
them to expand their target areas. The opportunity for a growth of the
market share and the opportunity to overcome a competition with a rival
firm also make Mergers more attractive to these firms. In the end of a
merger, both companies end up having access to each others resources
and for a new company these resources bring the benefits of gaining
experience thus an increased development phase.
With this reverse triangle merger agreement between Anthem and
Cigna, (1) Merger Sub Corp of Anthem will be merged with and into Cigna,
leaving Cigna to continue to exist as a surviving corporation. In this case
we have two mergers currently being worked on. Consequently, Cigna will
be the Initial Surviving Company and (1).1 Cigna will be wholly owned by
Anthem. Since a merger is a corporate strategy which enables the
companies to expand their operations by combining with another
company, in this case, Anthem will be able to reach the target markets it
couldnt have done before the agreement. Therefore, it will end up with a
larger market share. Mergers occur in a consensual schedule in which a
mutual consent of all sides are considered to be stated, Anthem and Cigna
shareholders will first be asked on to vote about the approval of the share
issuance, this voting is a prerequisite for the merger agreement to be
1 Andrew J. Sherman- Mergers & Acquisitions From A to Z(3rd Edition) p 7

adopted and to be completed. With the completion of the merger, the

former Cigna shareholders will own around 33% of the outstanding shares
of the Anthem common stock. As a result, Cigna Common Stock shares
which are being held as treasury stocks will exist no more. Cigna
Shareholders compensation can be seen when Cash Consideration and
Stock Consideration are studied. After the completion of the second
merger, the surviving corporation will be Anthem. As we read into the
agreement, it becomes clear to us that the merger between Anthem and
Cigna consists of cash for shares and share exchange payments.
Regarding the corporate structure of the Initial Surviving Company, the
merger will have the consequences of Anthem having nine of their current
members on the Board of Directors (1.13) (i) and 5 of Cignas current
members in the Board of Directors (one being the current President, Mr
Cordani and four independent ones according to NYSE and the SEC will be
forming the new Board of Directors. Joseph Swedish remaining as the
Chairman of the Board of Directors of Anthem and David Cordani being
the President and Chief Operating Officer of Anthem will bring benefits
regarding their vast experiences and know-how.
(b) Before the completion of the merger agreement, Anthem shall
deposit both evidence of shares in book-entry form representing the
Anthem Common Stock in benefit of shareholders of Cigna Common
Stock. Anthem also will need to provide the sufficient cash for the merger
before the effective time of the agreement. The Exchange Agent will also
be responsible for holding the cash which will be presented in lieu of the
fractional shares. The Exchange Fund in the agreement can be defined as
the holder of Anthem Common Stocks which are being deposited in
Exchange Agent. Shareholders of Cigna hold the Cigna Certificate
personally and keep a certificate representing these shares. However the
Book-Entry Shares holders are not required to deliver a Cigna Certificate
or any other letter to receive the Merger Consideration stated above in the
first paragraph. The owners of the Cigna Certificates and/ or Book Entry
Shares will have no legal rights over Cigna Common Stock. This
provisions main motive is to provide a confident environment to the seller
as well as protecting shareholders benefits.
(c) The buyer and the seller shall provide the relevant information of each
of the companies to avoid any lack of knowledge between two of them.
Representation and Warranties enable the both sides to carry out this
function both at the time of the agreement and during the closing. Both
parties must state these information solely based on truth and relevancy
of their situation between the time of the agreement and the closing.

Both Anthems and Cignas representations and warranties involve

matters regarding organizational concerns, capital structure, authority,
financial statements, board approval, vote required for the completion of
the transaction, litigation, taxes, accounting and financial matters,
securities law matters, financing, affiliate transactions, intellectual
property, employee benefit plan, labour matters and warranties.
For Anthem, Organizational matters include statements regarding the
articles of incorporations and bylaws which are delivered to Cigna are
true, correct and complete and all the outstanding share of capital stock
are owned directly or indirectly by Anthem, free of restrictions, except for
the restrictions imposed by applicable security laws. Anthem states that
there are no other agreements in which it will be a party of or by which it
is bound relating a vote to any shares of capital stock of Anthem.
Regarding Authority matters; Anthem guarantees that it holds all the
power and authority to enter the agreement as well as issuing shares of
Anthem Common Stock. Anthem assures that there is no need for any
approval of a Governmental Entity and there is no need for a required
period of time for Anthem to postpone the execution of the merger
agreement, other than the ones stated in the securities regulations or the
Healthcare Laws.
All the necessary documentation has been filled by Anthem according to
SEC requirements and Anthem assures that its consolidated financial
position and consolidated results of operations and cash flows are in
conformity with the U.S GAAP and that all of Anthems financial
adjustments will be complied with the requirements of the Securities Act,
the Exchange Act and the Sarbanes-Oxley Act are all stated under the
Financial Statements section (3.1) (d)
Anthem states that its Board has unanimously approved this Agreement,
and has recommended shareholders to approve the issue of shares and
also submitted the Share Issue to the shareholders for their approval.
Requirement for the completion of the transaction is the vote of the
majority
The litigation matters are clearly put by Anthems statement which
assures that there is no legal, administrative, arbitral or any other suit
pending or proceeding, pending or threatened against or affecting Anthem
or any Subsidiary of Anthem. The businesses of Anthem are conducted in
accordance with respect to every regulation of all the Governmental
Entities. Regarding the businesses of Anthem and its Subsidiaries, a full
compliance with HIPAA is being assured by Anthem. There hasnt been

any fine, penalty or any exclusion or suspension of Anthems or any of its

Subsidiaries.
No tax issues since Anthem and its Subsidiaries have paid all the required
payable taxes.
There hasnt been any notice from either SEC or any other Governmental
Entity regarding Anthems accounting policies being subject to any
investigation or inquiry.
Anthem states that it has completed all certifications required by the U.S
Federal Securities Regulation and that it has also established and
maintained disclosure controls and internal controls over financial
reporting of Anthem and its Subsidiaries.
For the Financing matters, Anthem delivered the commitment letter to
Cigna which involves the mutual agreement and commitment of all the
banks for the lending the amounts set forth in the letter.
Anthem states that there are no transactions, agreements or
understandings nor there are any proposals for such transactions to which
Anthem or its Subsidiaries are a party of. No loans to any executive
officers of the company or to any of its Subsidiaries are subject either.
Regarding the Intellectual Property issues, Anthem assures that it has
licenced and holds all intellectual property rights of its products and
businesses. Anthem does not infringe on, misappropriate or violate other
Persons intellectual property rights.
Anthem states that its employee benefit plan is established, operated and
administrated in compliance with ERISA and all the other applicable laws.
None of Anthems employees are a part of any collective bargaining or
work council agreement nor is Anthem and it assures that there is risk of
any prospective strike or other work stoppage.
All of Anthems businesses and assets are fully covered by insurance.
When we look into Cignas Representations and warranties, 3 vital points
stand out compared to those of Anthems; Capital Structure, Board
Approval and Votes Required for the completion of the process.
257,496,123 of 600,000,000 shares of Cigna Common Stock are stated to
be outstanding and non-outstanding stocks are 25,000,000 of the
preferred stock.

Like Anthem, Cignas Board has also unanimously declared that this
agreement is advisable and has approved the agreement and directed the
agreement to the shareholders for its adoption while recommending them
to approve the agreement.
While for Anthem to adopt the agreement all of shareholders are required
to vote, in Cignas case the vote of the majority of the shareholders of the
outstanding shares of Cigna Common Stock will be enough.
As the other party of this triangle merger, we look into Representations
and Warranties for Merger Sub.
Merger Sub is a wholly owned subsidiary of Anthem and exists validly
under the laws of Delaware. It has 1,000 shares of common stock which
are fully issued.
Merger Sub is authorized and has all power to enter this agreement. Since
Anthem is the sole shareholder if Merger Sub, its approval is required and
Anthem has approved this transaction.
There will be no conflicts with Merger Subs articles of incorporation or its
bylaws during the execution and consummation of this agreement.
(d) Regarding the Covenants provision; Cigna shall show its best efforts to
conduct its respective business to ordinary course and to preserve
business intact as well as their assets and properties. This provision
favours the buyer. While this provision consists of similar conditions and
facts for both parties, 4.1(n), 4.1(o) and 4.1(p) paragraphs add more
obligations on to Cigna. No change in bylaws or articles of incorporation
or no sale of shares or other similar rights will occur. It wont declare, set
aside, make or pay any dividend or any distribution. No acquisition of any
corporation larger than $200 million individual or $600 million in
aggregate and no sale, mortgage, lease of its assets only on the same
amounts will take place. No modification in its current investment policy
will take place. It will not adopt, propose or recommend any liquidation or
reorganization. Anthem states almost the same covenants as Cignas,
however with slightly less provisions. This provision works together with
representation and warranties to help setting forth a road map of the
events that are bound to occur between signing and closing
e) Additional Agreements
Before the date of this agreement, Anthem and Cigna shall prepare to fill
with the SEC the Joint Proxy Agreement before the date of this agreement
and following this, they will mail the Joint Proxy Agreement to their
shareholders and stockholders. All information concerning both parties

and Affiliates shall be clarified and stated. Parties are required to call for a
meeting of shareholders before form S-4 becomes effective and in that
agreement the recommendation of the adoption of the agreement should
be made. Anthem board shall recommend the approval of share issuance
to the shareholders, and use their best efforts to approve the issuance. In
case of a change of recommendation, if the agreement is not terminated
with the terms and conditions within, the Share Issuance shall be
submitted to the shareholders of Anthem for the purpose of voting on the
issuance. Both parties can postpone their shareholders meetings to
ensure that all the relevant material or amendment to Joint Proxy
Statement is provided to their shareholders. Both parties shall use their
best efforts to hold each of their Shareholders Meetings. Neither party
should enter into another contract by purchasing assets or equity with the
consequences stated at letter f.
Cigna states that it will not disclose non-public information that will lead to
any further transactions or to engage in discussions of any possible
transaction or agreement or to abandon the consummate the Mergers or
the present Agreement. Cigna agrees that it will cease and cause to
terminate any existing discussions or negotiations with Third Parties,
conducted prior to this Agreement.
Regarding financing matters, Anthem holds the right to amend the
Commitment Letter by adding lenders, arrangers, book runners, and
agents or in a manner that it would not affect the ability of Anthem to
fund the obligations stated in this Agreement. If Anthem and Cigna
becomes aware that part of the funding becomes unavailable, they should
use their reasonable best efforts to replace that funding by entering
alternative financing agreements.
(e) Conditions Precedent
The reps and warranties of both sides should be true and correct at the
date of this agreement. Both sides are responsible to perform the
obligations stated in this Agreement and both sides should avoid the
Material Adverse Exchange. To avoid harmful consequences which may be
a result of either partys action which may cause material adverse effect
on one of them, here parties promise to notify the situation to the other
party in an event of material change.
(f) Termination and Amendment
This provision defines under what terms and conditions the agreement
shall be terminated and the process should be aborted. This provision
especially works with all other provisions since them being violated by the

parties will cause the termination. If following conditions arise, the

Agreement may be terminated and the Mergers may be abandoned before
the Effective Time:
-Mutual written consent of the Parties regarding termination
-If the Merger is not consumed before 31 January 2017 by either party. The
party which failed to perform its obligations will not be able to have the
right to terminate this Agreement.
-If Anthem board fails to make the Anthem Recommendations or makes
changes in the Recommendation, approves or recommends an Anthem
Alternative Transaction, or if they fail to confirm the Anthem
Recommendation within 10 business days after a written request from
Cigna to do so, Cigna will be able to terminate the Agreement.
-Either party will have the right to terminate if the other party has a
breach of any representation, warranty, covenant or agreement, or
agreement, or if these become untrue after the date of this Agreement.
2) Are the provisions (Representations and Warranties, Covenants
Relating to the Conduct of Business, Conditions Precedent,
Termination and Amendment) in this agreement buyerfavourable or seller favourable (or some combination of buyer
and seller favourable) and why. Give examples (i.e., sample term
sheet) from each section of the agreement and Plan for Merger)
When we analyse the Representations and Warranties provision in depth,
we observe that this provision provides a favourable condition for both
sides since both parties are stating the same facts as well as the same
conditions in the instance of a breach of contract. When Section 3.1 (o)
Financing is studied, we see the Anthems statement regarding the
delivery and execution of the Commitment Letter. Since this statement
ensures the financing of the deal and the payment of the Cash
Consideration, this part is also favourable to Cigna.
Regarding the Covenants Relating to the Conduct of Business, Anthem
holds the permission to carry out other payments as well as some
amendments regarding issues like capital expenditures, tax material and
so on according to Section 4.1(j), (k), (l), (n), (o), (p) of the Agreement.
Usually those provisions clarify the situations which might arise in the
Merger Agreement yet the interpretation of this provision can be as it is
favourable to Anthem.
Conditions Precedent provision consists of statements from both parties
regarding the conditions to be fulfilled by and for each other, therefore it

is possible to consider this provision as favourable to both sides. However,

the requirement of listing and approval of Anthem Common Shares on
NYSE before the Merger seems to be in more favour of Cigna.
As stated in the Section 7.3 (Termination and Amendment) (a) (IV) and
7.3(b) (IV), either Cigna or Anthem will be paying $1,850.000.000 to each
other within two business days as the Termination Fee. Other fees are
considered to be Anthem Expense Fee ($600 million) and Reverse
Termination Fee ($1.85 billion). These fees are the obligations of Anthem,
and they do not apply to Cigna. Consequently, we can say that provisions
(d) and (e) of Section 7.3 are favourable for Cigna.

3) Asses critically the merits and distinguishing features of the

initial $48.3 billion bid for Cigna Corporation by Anthem, Inc. and
the final $53.8 billion offer that was accepted by Cigna
Corporation
On 3rd of June, 2015, Anthem made an initial bid of $48.3 billion to Cigna.
This bids per-share purchase price was $174.00 and the offer consisted of
a consideration of approximately 40% in cash plus through Anthems 60%
stock, representing a premium of 28% based on the unaffected closing
price of Cigna common stock on May, 28, 2015
60% of the new company was going to be owned by the Anthem
shareholders and the rest 40% of Cigna shareholders. This offer which was
rejected by Cigna also involved the board of directors of the company to
consist of 14 directors, 8 of them to be appointed by Anthem and 6 by
Cigna. One of the initial proposals distinguishing features was that Anthem
proposed Mr.Swedish to serve as chairman of the board of directors and
chief executive officer of the company, and Mr Cordani to serve as its
president and chief operating officer and as one of the directors appointed
by Cigna. The meeting later on made by the Anthem Board resulted in an
agreement of shareholders on the matter of increasing the price to $178
with a consideration of approximately 54% Anthem common stock and
46% cash plus a pro forma equity ownership of the combined company
comprised of approximately 62.5% Anthem shareholders and 37.5% Cigna
shareholders.
At Cigna Boards meeting on June 12, board of directors agreed to raise
the requested price around $180 per share. On June 16, the Anthems bid
was $178 per share; 46% cash and 54% Anthem stock. Cignas response

letter on the 18th June stated that they want the price of $180 per share
and the directors should be 8 from Anthem and instead of 6, 7 from Cigna.
Anthems increased its proposal up to $134 per share with a consideration
mix of approximately 31.4% Anthem common stock and 68.6% cash.
According to Anthem, this was going to be their final proposal. Regarding
the capital structure of the new entity, 76.3% was going to be
representing Anthem shareholders and 23.7% representing Cigna
shareholders with 10 directors from Anthem and 3 from Cigna. Cignas
response for this was to agree with the price per share however they
stated that they want the consideration 50% in cash and 50% in Anthem
stock and a combined company board split of 8 current Anthem directors
and 6 current Cigna directors. On 19th of June, Anthem sent the final
proposal to Cigna which consist a price of $184 per share with a
consideration mix of 60% cash and 40% Anthem common stock with a
combined company board split of 8 current Anthem directors and 6
current Cigna directors. This transaction was going to be financed with
Anthems available cash which is $6 billion, bank debt and unsecured
notes which are equal to $23 billion, equity issuance to Cigna
shareholders ($15 billion) and with a $5 billion equity issuance to the
market. A combination of stock-for-stock and cash involving debt
issuance, cash on hand and new equity issuance is being used by the
acquirer as a payment method. In the end, as the Anthem shareholders
ownership increased from 60% to 76.3% and premium reaching to 35.4%,
the cash component bid rose from 40% to 68.6% and price per share
increased up to $184.

4) Strategic Considerations involved in the $53.8 billion merger

between Anthem and Cigna; Business plan of Anthem and the
deals financial and strategic benefits to the company
According to the Anthem board of directors, a possible merger with Cigna
would have the benefits of creating a diversified, top quality health
services which will end up sparking a possible transformation in health
care industry. It would make the new company able to deliver meaningful
value to customers 2 by using the much broader supplier collaboration.
The new prospective innovations would enhance the opportunity to
provide a higher quality and more affordable health care for the consumer
end. Since Anthem is an experienced company in its own field, the use of
its expertise would consequently enable Cigna clients to have access to a
2 http://www.cigna.com/assets/docs/annual-reports-and-proxy-statements/2015%20special-meeting-and-proxy.pdf

10

better quality health services. After the transaction, Anthem will have the
opportunity to increase its operating efficiency by spreading its operating
costs to a larger membership base3 . As a consequence of providing more
affordable products and services to its customers, acquiring Cigna will also
bring savings in administrative costs, in network and medical
management areas as well.
Shareholders will be benefiting from the merger as a result of Cignas
financial strength and strong cash flow gained from its operations. Cignas
presence in the international market and the experience of its
management team will also bring benefits to Anthems shareholders.
Since having similar corporate cultures and industry backgrounds enable
companies to create more values from the mergers they are involved in,
considering both of the companies backgrounds and mutual values as
well as their experience as well as the reputation and financial strength of
Cigna, strategic motivations for this merger becomes more visible. The
negotiation power of a big company which will be created by this merger
cannot be underestimated either, since bigger companies are able to
negotiate better prices with pharmaceutical companies and doctors, which
brings a lot of benefits for the consumers.
When financial matters are concerned, United holds the top position
regarding the Membership Scale in the industry where Anthem follows it
and Cigna come the 4th on the scale. However, after the completion of the
Merger, the new company will become the market leader with a
prospective 53,191 members. The current revenue of Anthem is $78.5 and
the estimated revenue after the merger will be more than $115 billion.
Anthems business plan includes its expectations of this transaction to be
more than 10% added to earnings per share in the first year and double
that after year two. Anthem is expecting more than $2 billion in synergies
after year two and pro forma EPS (earnings per share) in 2018 is expected
to be $17 per share.
Both companies have presences in broad geographies, as a consequence
of this merger Anthem will gain more ground regarding the key local
geographies. This will help the company to attract new customers and to
have a better reputation. Another motivation for this merger could be the
high skilled management team being acquired, this will help the combined
company to gain value from its managers. When Swedish and Cordanis
market reputation, experience and skills are taken into account, a
3 http://www.cigna.com/assets/docs/annual-reports-and-proxy-statements/2015%20special-meeting-and-proxy.pdf

11

psychological and social influence on shareholders or even the rival

companies is possible after this merger.

5) Explain whether Anthems final bid offers fair value for Cignas
stock. Consider also whether the Anthems final bid offers
perhaps too high a premium for Cignas shares.
One of the vital matters in a merger is the valuation of the target
company. Since seller and buyer will be having different expectations, it is
not always easy to price the target accurately. According to the two
financial advisors of Anthem who are Credit Suisse and UBS, the share
values differ. A value between $178.84 and $230.60 per share has been
stated by Credit Suisse and the UBS indication provides us a value of
$175.11 to $219.76 per share. On the other side, Cignas financial advisor
Morgan Stanley indicates the Cigna share price to be between $168 and
$211. Anthems final offer per share stands at $188. Within the five top
tier companies in the healthcare market, the merger of Aetna and
Humana will have some consequences for the market. For Anthem to be
able to both sustain the attractiveness and to prevent any negative
shareholder response in short term, it needs to complete this merger
successfully. As the industry is developing with mergers and becoming
more competitive, regardless of how high the bid may seem to be, it will
have great benefits in the long term for Anthem. For strategic purposes
and when the long term goals are considered, the Anthems final bid is a
fair value for Cignas stock.
6) Assess critically the market response (both short term and
long term) of the Anthem Cigna merger. Critically assess the
possible impact on the completed Anthem-Cigna merger on the
health insurance industry. Please supply support for your
answers.
Cigna, being one of the largest insurance companies in the U.S with a
market capitalization of $40.3 billion, it is ranked 97th in the Fortune 500
Rankings for 2014. On the other hand, with a market capitalization of $42
billion in the first half of the 2015 and a consumer base of around 69
million people, Anthem is 38th in the fortune 500 rankings of 2014. The
merger of these two giant companies will be the largest ever deal in the
insurance industry history.4 In the long run, cost efficiency will be an
important outcome. Expected per-share earnings for Anthem is nearly
4 http://www.forbes.com/sites/dandiamond/2015/07/24/since-announcingmerger-anthem-and-cigna-have-already-lost-3-billion-on-wall-street/

12

%10 for the first year and will be doubled up next year. Anthem expects
the deal to generate $2 billion annually from the synergies. Covering
approximately 53 million medical members will make the combined
company a market-leading international franchise since it will have access
to new countries as well. 5We observer a raise in Anthems per-share
earnings for 2015; from $9.90, it has raised to more than$10. As for the
second quarter excluding certain items, per-share earnings of Anthem is
expected to be between $3.13- $3.10 while according to the analysts, the
expected per-share earnings in the second quarter was going to be $2.70
and $10.08 for the year. Annual cost synergy estimation for Anthem for
the first two years following the closing is around $2 billion pre-tax.
Increasing the total commercial membership up to 44.2 million is another
reason for its commercial business to go up.
According to Cigna, the merger will have a positive outcome regarding the
efficiency and reduce the costs for customers. The merger will have an
impact of creating a big tree in the health insurance industry, reshaping
its top 5 market leaders. When the merger was announced, both
companies experienced a drastic drop in their shares; Cignas share price
fell to $145.91 from $154.36 within a day, causing the company to lose
around $2.2 billion. Anthems share price decreased from $155.23 to
$150.76, adding up to a $1.1 billion loss for the market value of the
company6. The merger will have possible bad effects on health industry
regarding reducing the competition and decreasing the choice according
the American Medical Association. A dangerous consolidation in the health
insurance world is what is being afraid of since it can hurt both the
patients and health care providers.7
7) Discuss the possible regulatory hurdles or barriers that could
block or make the Anthem-Cigna merger difficult to complete by
2016.
The biggest merger in the health insurance industry raised concerns
regarding legal and ethical issues. Legal issues such as federal regulations
regarding competition and antitrust could hold the deal from completion.
5 http://betterhealthcaretogether.com/content/uploads/2015/10/BetterHealthcare-Together_Press-Release.pdf
6 http://www.forbes.com/sites/dandiamond/2015/07/24/since-announcingmerger-anthem-and-cigna-have-already-lost-3-billion-on-wall-street/
7 http://ctmirror.org/2015/08/31/aetna-humana-anthem-cigna-mergers-spark-d-clobbying-war/

13

Since the new formed company will be the largest health insurer in the
US. concerns over monopolies have already arisen. It is possible for
antitrust regulators to reject the deal. American Hospital Association has
stated its concerns over a possible risk of harming tens of millions of
customers due to the new companys position which will not make them
to prevent any anticompetitive effects of the merger. On the political side,
Presidential Candidate of Democrats Hillary Clinton believes that it is vital
to be highly sceptical of the deal because of the possible risks it will have
for the customers, so it is clear that the outcome of the presidential
elections can have an influence on this merger too.
Because of the volume of the deal, DOJ and FTC will be watching it closely.
DOJ and FTC will need to be constantly informed of the transactions and
the companies will need to wait for 30 days before completing them. To
make sure competition is preserved and the mergers do not end up with
pushing higher costs for consumer, the DOJ antitrust division will need to
assess the whole of the healthcare industry.
The DOJ antitrust division will assess the healthcare industry as a whole,
to make sure competition is preserved and the mergers dont lead to
higher costs for consumers. If they encounter antitrust issues then: 1)
Parties have to submit data to the antitrust division. 2) Once the antitrust
division receives that information, it then has another 30 days to decide
whether to clear the transaction, or to file a motion in federal court for a
preliminary injunction - enter into an agreement with the parties that
would give the government more time to investigate before the deal is
consummated
However, the companies believe that the market is already highly
competitive and will remain that way therefore the customers will still
have a wide range of competitors to choose from.
Anthem should abide certain rules to be able to use the Blue Brand since
it is a licensee of the Blue Cross Blue Shield Association. It is uncertain
how the Blue Cross and Blue Shield Association membership of Anthem
will have an effect on Department of Justice Review. The antitrust matters
defined by McCarran-Ferguson Act and the waiting period stated under the
Hart-Scott-Rodino Antitrust Improvement Act must be considered by the
parties as well.