December 4, 2018 / 6:30 PM / 8 days ago

U.S. judge concerned over government nod for CVS-Aetna deal

FILE PHOTO: The CVS logo is seen at one of their stores in Manhattan, New York, U.S., August 1, 2016. REUTERS/Andrew Kelly/File Photo

WASHINGTON (Reuters) - A federal judge who has been asked to sign off on the U.S. government’s decision to approve CVS Health Corp’s (CVS.N) acquisition of insurer Aetna Inc said Tuesday he was “less convinced” than the government that the companies had struck a deal that ensured the merger was legal under antitrust law.

Judge Richard Leon of the U.S. District Court for the District of Columbia had complained last week in a hearing that the two sides had treated him as a “rubber stamp” for the agreement. CVS closed the $69 billion transaction last week and began the integration process.

“At this stage, I am less convinced of the sufficiency of the government’s negotiated remedy than the government is,” he wrote in the order issued on Tuesday.

The Justice Department approved the merger of CVS, a pharmacy chain and benefits manager, and Aetna on condition that the health insurer sell its Medicare Part D drug plan business to WellCare Health Plans Inc (WCG.N). That sale was completed last month.

Also in the order, Leon asked the government and the companies to file a brief by Dec. 14 to show why their integration should not be halted while he considers whether or not to approve the consent decree reached in October.

Most consent agreements that the antitrust agencies strike with companies to resolve competitive concerns are approved by federal courts with little fuss under the 1974 Tunney Act, which requires courts to ensure the agreements are in the public interest.

Companies generally do not wait for final court approval before closing their transactions.

Reporting by Diane Bartz; Editing by Bernadette Baum

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