December 8, 2017 / 3:40 PM / 7 months ago

CVS expects Justice Department to handle review of Aetna deal

WASHINGTON (Reuters) - CVS Health Corp expects the U.S. Justice Department to do the antitrust review of its planned acquisition of health insurer Aetna Inc, a spokesman for the drugstore chain operator said.

FILE PHOTO: Logos of CVS and Aetna are displayed on a monitor above the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., December 5, 2017. REUTERS/Lucas Jackson

CVS Health Corp and Aetna announced the $69 billion deal on Dec. 3, arguing it would enable the companies to tackle soaring healthcare spending by offering lower-cost medical services in pharmacies.

The Justice Department and U.S. Federal Trade Commission share the job of reviewing mergers to make sure they do not hurt consumers.

The deal, the year’s largest, will combine one of the nation’s biggest pharmacy benefits managers and pharmacy operators with one of its oldest health insurers.

Asked which antitrust agency would review the deal, CVS spokesman David Palombi late on Thursday said: “Our expectation is that it will be the Justice Department.”

No matter who reviews the deal, six antitrust experts have told Reuters that they expect it to be approved since most of the two companies’ business is in separate markets.

Two said they believed the Justice Department could try to stop the transaction for fear that customers would face higher drug prices or have less choice. The U.S. government tends to block mergers if the combining companies are competitors in a concentrated market.

Deals like this one, where companies make acquisitions up or down the supply chain, tend to be considered to be inherently efficient. The big exception is if there is a fear that the purchasing companies’ rivals would lose critical access to the suppliers’ products. That is the case with AT&T Inc’s deal for Time Warner Inc, which the Justice Department has sued to stop.

Reporting by Diane Bartz; Editing by Meredith Mazzilli

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