WASHINGTON — The Justice Department on Thursday sued to block a $13 billion acquisition of a $13 billion health technology company by a subsidiary of UnitedHealth Group, in the Biden administration’s latest move to curb corporate consolidation.
The agency argued that a UnitedHealth deal to buy health technology company Change Healthcare would give UnitedHealth sensitive data it could use against its competitors in the insurance sector. The suit has been filed in the United States District Court for the District of Columbia. New York and Minnesota also joined the lawsuit.
A spokeswoman for UnitedHealth subsidiary Optum said in a statement that the Justice Department’s “deeply flawed position is based on highly speculative theories that do not reflect the reality of the health care would defend the case”. powerful.” A spokeswoman for Change Healthcare said it was still “working to close the merger while meeting our obligations under the merger agreement.”
The deal is the latest deal to face opposition from the Biden administration, which has made corporate consolidation a central part of its economic agenda. President Biden signed an executive order last year to fuel competition in several sectors. He also appointed Lina Khan, a prominent critic of the tech giants, to lead the Federal Trade Commission and Jonathan Kanter, a lawyer who has represented major corporations, as head of antitrust efforts at the Justice Department.
Since then, the FTC has blocked Lockheed Martin from buying a rocket propulsion system maker and chip giant Nvidia from buying design firm Arm. Even before Mr. Kanter was confirmed, the Justice Department sued to block the merger of two major insurance brokers; the purchase of Simon & Schuster by the publisher Penguin Random House; and a deal that would have married some of JetBlue’s operations to American Airlines.
“Making sure the markets are really competitive is a vital part of this effort,” said William Baer, who was previously the head of the Justice Department’s antitrust division.
In a statement, Attorney General Merrick B. Garland said the agency is “committed to challenging anticompetitive mergers, particularly those at the intersection of healthcare and data.”
Optum said last year it would buy Change Healthcare, a company that offers technology services to insurers. UnitedHealth is one of the largest healthcare companies in the country, with revenues of $287.6 billion in 2021. In addition to healthcare information technology, the Optum unit owns physician offices, a large chain of surgery centers and one of the largest pharmacies of the country. benefit managers.
At the heart of the Justice Department’s lawsuit is the data Change Healthcare collects when it helps process insurance claims. The department argued that the deal would allow UnitedHealth to see the rules its competitors were using to process and undermine claims. UnitedHealth could also crack patient data from other insurers to gain a competitive advantage, the agency said.
The lawsuit alleges that, according to one UnitedHealth estimate, more than half of U.S. medical insurance claims “go through (or touch)” Change Healthcare’s systems. It says the former CEO of UnitedHealth saw the tech company’s data as the “base” of the reasoning behind the deal.
The lawsuit also argued that UnitedHealth could withhold Change Healthcare’s products — which other insurers use — from its rivals or keep some of its new innovations for itself. The Justice Department added that the deal would give UnitedHealth a monopoly on a type of service used to screen insurance claims for errors and speed up processing.
The companies have said the acquisition will improve efficiency in the industry. They also investigated the sale of the portion of Change Healthcare that the Justice Department said would give UnitedHealth a new monopoly.
Lawmakers and regulators are increasingly concerned that large companies could use a wealth of data to hurt their rivals. A congressional committee has investigated whether Amazon uses data from third-party merchants who use its platform to, for example, develop competing products. Critics of Facebook have also argued that with years of user data, the company is making it difficult for a fledgling service to challenge its dominance.
Since Mr Kanter joined the Justice Department’s antitrust division, critics have said he should not oversee cases against companies whose rivals he represented while in private practice. According to a financial disclosure form he filed last year, he once represented Cigna, a major insurer that competes with UnitedHealth, and the third-party health care company Teladoc.
Mr. Kanter did not participate in the UnitedHealth lawsuit, said a person familiar with the Justice Department’s case.
Reed Abelson reporting contributed.
