Loss in UnitedHealth/Change Trial May Not Lower DOJ’s Deal-Blocking Appetite

by Leslie Small

 

Recently, UnitedHealth Group and Change Healthcare Inc. received welcome news when a federal judge ruled that their $13 billion deal could proceed despite the U.S. Dept. of Justice’s contention that it would illegally stifle competition. While it isn’t yet clear whether the DOJ will appeal the ruling, experts say the case itself offers important lessons for the health care industry and other firms mulling similar transactions.   Judge doubts UnitedHealth will misuse data  In its lawsuit seeking to block the UnitedHealth/Change deal, the DOJ argued that acquiring Change would result in UnitedHealth controlling more than 90% of the first-pass claims editing technology market by combining the two largest players.   And, regulators said, that would give UnitedHealth’s OptumInsight arm the power to “use its health insurance rivals’ competitively sensitive information for its own business purposes and control these competitors’ access to innovations in vital health care technology.”    But in an opinion filed on Sept. 21, Judge Carl Nichols of the U.S. District Court of the District of Columbia said the companies’ proposed divestiture of Change’s claims-editing technology, ClaimsXten, was enough to allay any direct competitive concerns associated with the UnitedHealth/Change deal.     Nichols also argued that Optum has no motivation to misuse Change’s data, as that would hurt its business reputation and relationships.  Admin will still go after vertical deals  Regardless of whether an appeal is filed, the government’s loss in this case doesn’t mean that it will back off its stated intention of being aggressive about antitrust enforcement, legal and industry experts tell AIS Health.   “Vertical acquisitions of this type will be increasingly challenged” by the Biden administration, antitrust attorney David Balto tells AIS Health, referring to deals that integrate different stages of a supply chain. “I don’t think that this decision is going to deter the increased enforcement in this area,” he adds.   When previous administrations decided to challenge a deal, generally they only did so when there was a “high probability” that the government would win, says Chris Meekins, a health care policy research analyst at Raymond James. “What we’re seeing now is that the leadership [at the DOJ and Federal Trade Commission] is willing to pursue cases even if it is a relative jump-ball situation, because they believe that even if they lose those cases, the result will be that they’ll increase pressure on Congress and they will advance their legal approach toward antitrust actions.”

 

From Health Plan Weekly

 

Subscribers may read the in-depth article online. Learn more about subscribing to AIS Health's publications.