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Highmark, Independence Blue Cross call off merger

By , - Last modified: February 14, 2011 at 11:45 AM

The Blues merger is off.

The Blues merger is off.

Pittsburgh-based Highmark Inc. and Philadelphia-based Independence Blue Cross today announced the withdrawal of their application to merge, citing unacceptable conditions set by the Pennsylvania Department of Insurance.

To address its concerns that a merger would dampen competition, the department would have required the combined company to give up one of the two Blues brands -- the Blue Cross or the Blue Shield, according to a statement from Highmark and Independence. Highmark does business in Central Pennsylvania as Highmark Blue Shield.

"Giving up one of our brands would preclude the new company from delivering to our customers, communities and the Commonwealth the full results we had projected," the companies wrote in a joint statement.

The insurers filed their merger application in April 2007. They had argued that the combination would cut costs and would not reduce competition because they have different market areas.

The Insurance Department welcomes the withdrawal of the application, Insurance Commissioner Joel Ario said in a written statement.

"We were prepared to issue a disapproval order on January 27, but this withdrawal smoothes the process and allows all parties to focus on the challenges we all face in addressing the larger health care crisis," he said.

Ario has scheduled a news conference for 11 a.m. tomorrow.

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