Megamergers that deprive American consumers of competition are illegal. But the urge to merge is often so strong that antitrust risks rarely prevent large corporations from the attempt. Long before parties sign deals, issue press releases, and file for government approval, they must decide who will bear the risk that the Federal Trade Commission or the Department of Justice will annul the deal.
But as a 2020 decision by the Delaware Court of Chancery shows, these provisions are only as good as their enforceability. By rejecting cross-claims for breach of contract brought by both Anthem and Cigna—arising from their failed merger attempt—the court cast new doubt on the value of contractual antitrust risk provisions, and, at a minimum, offers some hard lessons learned on how to better draft them in the future. This article briefly describes the court's analysis. Many common law contract rules can be varied by agreement. This article addresses practical drafting approaches the parties should consider to address these issues.