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Anthem and Cigna Accuse Each Other of Merger Breach

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Michelle Toh
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September 22, 2016, 4:59 AM ET
Health Insurance Provider Anthem Blue Cross To Hike Rates
WOODLAND HILLS, CA - FEBRUARY 9: The Anthem Blue Cross headquarters is seen after the health insurer began informing its individual policyholders of rate hikes up to 39 percent to take effect at the beginning of March, on February 9, 2010 in Woodland Hills, California. Anthem Blue Cross, which has the highest number of individual customers in California, raised rates by as much as 68 percent in 2009. Health insurance companies in California can legally raise their rates at any time by as much and as they want. (Photo by David McNew/Getty Images)David McNew/ Getty Images
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The U.S. government, which is suing to stop Anthem‘s (ANTM) proposed purchase of Cigna (CI), is pressing the health insurers to provide letters in which each of them accused the other of breaching the merger agreement, according to court documents filed on Wednesday.

Anthem and Cigna agreed last year to merge in a $45 billion deal that would create the largest U.S. health insurer, but disagreements became public in the spring.

The Justice Department sued in July to block the deal, saying it would stifle competition. Trial has been set for Nov. 21, with a decision expected in January.

In the documents, the Justice Department said it had asked a special master, a court official who manages cases, to force the insurers to produce letters between their attorneys related to the alleged breaches of the merger agreement.

The department said the letters were relevant because they “reveal the current state of hostility between defendants,” and the companies argued that the merger would create efficiencies that save consumers money.

See also: Tesla Says Lawsuits Could Delay $2.6 Billion Merger with SolarCity

Anthem spokeswoman Bonnie Jacobs said in an email that “Anthem remains firmly committed and focused on defending the litigation.”

During a pre-trial hearing held in August, Anthem‘s lawyer, Christopher Curran, said the companies had such a contentious relationship that Anthem would be unlikely to convince Cignato extend merger deadlines, as often happens in antitrust cases.

In July, the Justice Department also filed a lawsuit to block Aetna‘s (AET) $33 billion planned acquisition of Humana (HUM). The trial on the Aetna deal is set for Dec. 5.

See also: Bayer Considers Letting Go of the Monsanto Name

The Justice Department has argued that the proposed Anthem–Cigna and Aetna-Humana mergers would raise prices for consumers and stifle innovation by reducing the number of large national insurers from five to three.

If both mergers went through, No. 1 U.S. insurer UnitedHealth Group (UNH) would rank second after Anthem. Aetna would be No. 3.

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