Cvs And Aetna Mergers

Unfortunately, although antitrust agencies are paying attention to recent court actions against mergers, the FTC investigates only 1-2% of consolidations (McCanne, 2014). It is also important to remember than public payers such as Medicare and Medicaid set prices to physicians and hospitals with no room for negotiating and conversely private insurers may use their market-share leverage to negotiate reimbursements. Integrative care in the form of hospital consolidation has been shown to reduce costs by 10-20% but this cost has not been shown to produce a cost savings to private insurers (Cutler & Morton, 2014).

While the FTC does pass most mergers that are brought forth, some deals do not go through. One of the deals that did not go through was when in 2013, SYSCO Corporation put in an offer to purchase rival U.S. Foods for what was to be worth around $8.2 Billion (F). If this deal would have went through, then the combined company would have created a powerhouse that would have made up 75 percent of the food distribution market in the United States (F). After over a year of trying to make the merger happen, a Washington U.S. District Judge put forth a preliminary injunction that stated the acquisition was being blocked over objections that said the larger company would hurt competition (G). This decision came after a lawsuit was filed by the FTC

According to Rusli, the merger would create more in-store traffic for CVS and increase both companies’ consumer base. This merger gave CVS the opportunity to expand both its own small pharmacy benefits manager business and mail order business. CVS’s opportunity to take advantage of Caremark’s pharmacy benefits manager business allowed it to take advantage of the mail order business as well that had begun cutting into drug stores’ revenue (Rusli, 2013). By providing its customers with a unique set of services and gaining the market power to control costs, CVS Caremark gained a competitive advantage. Unless competitors like Walgreens and Rite Aid find a way to respond to CVS Caremark’s strategy, it will be difficult to remain competitive with this firm for long. Overall, the merger was a great strategic move on behalf of both organizations, which helped ensure the current success of CVS Caremark.

Aetna is one of the nation’s leading diversified health care benefits companies, serving an estimated 44 million people with information and resources to help them make better informed decisions about their health care. The assignment given is about Strategic Management and Strategic Competitiveness for which the author has chosen Aetna. The author is required to assess how globalization and technology changes have impacted the Corporation. Secondly, to apply the industrial organization model and the resource-based model to determine how the corporation could earn above-average returns. Furthermore, to assess how the vision statement and mission statement of the corporation influence its overall success. In addition, to

In 1998 Merck and Co. (Merck) faced a challenge from the FTC on the basis of anti-trust concerns, referring to their acquisition of Medco. However, this was a case where the firm was challenged several years after the acquisition took place. The FTC challenged Merck arguing that the acquisition of Medco, which had subsequently become Merck-Medco a subsidiary of Merck, could result in a lessening of competition that would be detrimental to the industry and the consumers. This was due to Medco being a pharmacy benefits manager (PBM) . The concern was that the acquisition could lead to increasing prices and a potential decrease in quality (FTC, 1998). When looking at the merger it may be argued that it there were a number of factors which would make it attractive Merck, but these were many of the same factors which may cause concern in terms of the way the merger would impact on competition and lead to the subsequent challenge.

Merck & Company was the world largest drug manufacturer during the 1990’s. They planned to acquire Medco Containment Services Incorporated which was the largest prescription benefits management company (PBM) and marketer of mail-order medicines in the United States. They were both in the pharmaceutical industry. Merck planned to acquire Medco for $6.6 billion on July 28, 1993. I believe that their merger will be beneficial to each other because the major force driving the acquisition of Medco by Merck was Medco’s extensive database which contains a computer profile of each of its 33 million customers, amounting to 26% of all people. Medco clients include 100 fortune 500 companies and 58 Blue Cross Blue Shield group and insurance Companies. Basically, Merck will Medco database to identify prescriptions that can be switch to a Merck drug. By having access to Medco database, it will definitely increase their sales. That database can also allow Merck to determine the patient that did not refill their prescriptions which can lead to a considerable decrease of sales revenues each year. Finally, Merck will also use Medco computerized patient record system to show that the premium paid for Merck drug is worth the price charged. The merger will also save about $ 1 billion a year in our operations. Medco database is very crucial for Merck and as for the merger. It will really help Merck target and achieve a precise

When the CMA conducts the investigation for mergers they look for SLC, which is the significant lessening of the competition. SLC will occur when the competition between the firms is noticeably lower after the merger than it previously was, (Competition and market authority, 2015) and consequently there will be worse result for the consumers such as higher prices, lower quality of product and lower choices. This is an important concept because according to the key principles of policy, “the sole goal of the policy should be competition”. (HAY, 1993) Every time CMA conducts an investigation they make sure that the competition is not hampered by the merger taking

An approval from directors of each corporations is required in the transaction of a merger plan. Additionally, the approval should be filed with the state officials which will issue a certificate of merger to the surviving company. In a regulated industry, a company requires approval of acquisition from a regulator and the likelihood and speed of antitrust or regulatory approval might be affected by how merger trends in its industry (AKD, n.d.). Antitrust approvals prevents illegal practices that are price-fixing and mergers conspired by companies who want to achieve monopoly power. This would decrease the competitive vigor of the markets. Therefore, antitrust approval is necessary in an open market because a competitive market lower

In any merger, or acquisition for that matter, it can be extremely difficult. In a lot of cases mergers often fail to produce the anticipated gains.

The government sometimes has to step in to minimise the formation of monopolies. British Airways were hopeful for a merger with American Airlines which would have made them a dominant airline in major airports across the world. The deal was eventually stopped because of its anti competitive nature. In addition to monopolies, a popular critique on mergers and acquisitions is they just don't work. “...the Boston consultancy group estimate that 64% of recent US acquisitions actually destroy value for the acquirers shareholders” (Kotler et al 2004) “rather than increased profitability, mergers and acquisitions have come to be associated with lowered morale, job dissatisfaction, unproductive behaviour...” (Meeks 1977, Sinetar 1981, Attendorf 1986, Cartwright & Cooper 1993). Three major reasons for the failure of mergers and acquisitions are a clash of organisational culture, human relations dilemmas and abandoning core competencies. Different organisations have unique styles of going about their day to day operations. When a company merges with or acquires another the dominant culture usually prevails however employees from the organisation with the less dominant culture might still carry on doing things the way they've always done it thus causing this clash.

* There were many companies are re-organized through merger or acquisition to adopt new technologies, gain economies of scale and to fund in US. There are no significant information stated in the case on the regulations of company mergers and acquisitions in US.

The decision for a company to merge with another company, especially a rival firm, can be both rewarding and challenging at times. In an effort to ensure that businesses do not attempt to merge with an intention to deceit, the Federal Trade Commission was established. The Federal Trade Commission (FTC) defined as an “independent federal agency whose main goals are to protect consumers and to ensure a strong competitive market by enforcing a variety of consumer protection and antitrust laws” (Investopedia, 2015). The FTC has the responsibility to ensure that businesses are adhering to good business practices and following business rules. If violations are discovered, the company needs to be handled in accordance with the laws set

Companies use various strategies to gain access to new markets and increase their profitability. Among the strategies are mergers and acquisition, which enable a company to gain synergy, industry visibility as well as economies of scale. Acquisition involves a takeover of one company, the target by another company called the acquirer. The acquired company may cease to exist and the acquirer’s stock continues to be traded. Mergers, on the other hand, involve two companies which are of approximately the same size or resources agree to form a single new company instead of having separate ownerships. Moreover, CEOs may decide to join their companies together for the best interest of both firms to form a merger. However, mergers and acquisitions are dependent on their purchase style, such as hostile or friendly, and how both exercises are announced and received by the stakeholders.

Mergers have become the way to go in the current climate of instability due to the recession. Since more and more companies are now showing the openness and eagerness towards mergers to enhance the business or to achieve stability, the issues associated with mergers are ever so under scrutiny than ever before.

The case study of federal trade commission versus staples and office depot is about how these are the two largest office supply chains in the country. In September 1996 a proposal was developed to merge the two big companies. Since the superstores had a record of substantially cutting the prices of office supplies to their consumers. On October 1996 staples and office depot filed notice to the federal trade commission for their intention to merge. However the FTC looked at it as a violation of the antitrust laws.