District Court Denies Motion for Preliminary Injunction to Halt the Express Scripts/Medco Merger | Practical Law

District Court Denies Motion for Preliminary Injunction to Halt the Express Scripts/Medco Merger | Practical Law

The US District Court for the Western District of Pennsylvania recently denied a preliminary injunction motion to halt the closed merger between competitors Express Scripts, Inc. and Medco Health Solutions, Inc. based, in part, on the speed and scale of the companies' integration efforts.

District Court Denies Motion for Preliminary Injunction to Halt the Express Scripts/Medco Merger

by PLC Antitrust
Published on 24 May 2012USA (National/Federal)
The US District Court for the Western District of Pennsylvania recently denied a preliminary injunction motion to halt the closed merger between competitors Express Scripts, Inc. and Medco Health Solutions, Inc. based, in part, on the speed and scale of the companies' integration efforts.
The National Association of Chain Drug Stores, the National Community Pharmacists Association and certain retail pharmacies failed to halt the closed merger between competing pharmaceutical benefit management companies Express Scripts, Inc. and Medco Health Solutions, Inc. In a memorandum order, the US District Court for the Western District of Pennsylvania denied the plaintiffs' motion for a preliminary injunction, holding, in part, that the immediate and irreparable harm complained of by the plaintiffs had already occurred given the swift integration of the merging parties' businesses.
The plaintiffs alleged that the merger, which had been investigated and allowed to close by the FTC, would harm them by:
  • Destroying Medco as a significant competitor in the relevant market because Express Scripts would:
    • displace Medco's management and operations personnel;
    • assume Medco's administrative functions; and
    • learn Medco's confidential and competitively sensitive information.
  • Diverting the merged firm's customers to its mail order and special pharmacies causing some of the plaintiffs to lose their businesses.
The court found that the plaintiffs' fears of losing Medco as a viable competitor in the market had already come true. In the short time between the plaintiffs' initial filing and oral arguments, the merging parties closed and integrated their businesses, which included:
  • Terminating Medco's senior management and sales and supply chain leadership.
  • Providing Medco's customer, pricing and strategic planning information to Express Scripts.
The court held that untangling the companies post-integration and holding Medco separate from Express Scripts would not allow Medco to compete effectively or likely survive on its own, the very harm that the plaintiffs sought to prevent. In addition, the court found the plaintiffs' arguments about potentially losing business due to the merger as speculative and an inappropriate basis on which to issue a preliminary injunction.
Court Documents