Federal Judge Blocks Anthem's Planned Acquisition of Cigna

Features Dow Jones Newswires

The judge's gavel is seen in court room 422 of the New York Supreme Court at 60 Centre Street (Reuters)

WASHINGTON -- A federal judge on Wednesday blocked health insurer Anthem Inc. from acquiring rival Cigna Corp., the second court ruling in recent weeks to deal a decisive rebuke to efforts to reshape the industry through megamergers.

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The decision, by U.S. District Judge Amy Berman Jackson, said the proposed $48 billion deal violated federal antitrust law because it would create an unacceptable reduction in the number of companies that can serve large national employers that insure their workers.

The ruling echoed a decision by a different judge last month who blocked Aetna Inc.'s plans to take over Humana Inc. Though the two proposed insurer combinations were different in many ways, the message from the courts was similar: Judges found that merging top industry rivals threatened higher prices and less service, with the benefits of those deals failing to outweigh the potential harms.

While Aetna is considering a possible appeal in its case, Wednesday's ruling almost certainly kills the Anthem-Cigna transaction, as discord between the companies has grown considerably since they announced their deal in July 2015.

At the deal's inception, the insurers said their marriage would create a diversified, innovative and more efficient health insurer. But the two sides' relationship soured over time as they clashed over leadership styles and visions for the future.

The companies squabbled during the Justice Department's review of the transaction and eventually accused each other of violating the merger agreement.

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Write to Brent Kendall at brent.kendall@wsj.com and Anna Wilde Mathews at anna.mathews@wsj.com