A federal appeals court in Washington on Fridayrejected Anthem Inc.’s proposed $54 billionacquisition of Cigna Corp., upholding a trial judge’s decision toblock the deal on the ground it would substantially reducecompetition.

Anthem had argued in the U.S. Court of Appealsfor the D.C. Circuit that any anti-competitive problems with thedeal would be outweighed by billions of dollars in savings thatwould be passed on to consumers. Anthem, represented by White &Case partner Christopher Curran, said the lower court hadfailed to give those savings — or “efficiencies,” as the lawyersreferred to them — proper weight when she issued an injunctionblocking the combination of the two health insurers.

Writing for a divided three-judge panel, Judge Judith Rogersupheld U.S. District Judge Amy Berman Jackson’s decision to enjointhe merger. The trial court, Rogers wrote, “did not abuse itsdiscretion” by rejecting the merger “based on Anthem’s failure toshow the kind of extraordinary efficiencies necessary to offset theconceded anticompetitive effect of the merger in the fourteenAnthem states: the loss of Cigna, an innovative competitor in ahighly concentrated market.”

Rogers was joined in the decision by Judge Patricia Millett. Ina concurring opinion, Millett struck down Anthem’s efficienciesargument in harsher terms.

“Paying less to get less is not an efficiency; it is evidence ofthe anticompetitive consequences of reducing competition andeliminating an innovative competitor in a highly concentratedmarket,” Millett wrote.

In a dissenting opinion, Judge Brett Kavanaugh said theAnthem-Cigna deal should be saved for the cost savings it wouldcreate for consumers.

“The merged Anthem-Cigna would be a more powerful purchasingagent than Anthem and Cigna operating independently,” Kavanaughwrote. “The merged Anthem-Cigna would therefore be able tonegotiate lower provider rates on behalf of its employer-customers.Those lower provider rates would mean cost savings that would bepassed through directly to the employer-customers.”

Kavanaugh is the same judge who wrote the opinion, inOctober, in connection with a ruling on the Consumer FinancialProtection Bureau provision in the Dodd-Frank Act, that foundthe "massive, unchecked" authority of the bureau's director to beunlawfu.

The Justice Department in a statement said it was "pleased withthe appellate court’s decision. It upholds an injunction againstthe merger of two of the country’s largest health insurers, whichnot only would have led to higher prices but also slowed innovationand harmed consumers by weakening value-based offerings aimed atlowering medical costs."

Related: 5 quick Anthem earnings highlights foragents

Today's decision is a win for consumers in New York and acrossthe country. We are very pleased that the Court of Appeals agreedwith the District Court’s finding that this merger would violateantitrust laws by substantially lessening competition in commercialhealth insurance markets, likely leading to increased healthinsurance premiums and reduced quality and innovation.

Several trade groups had urged the D.C. Circuit to keep theinjunction in place against the Anthem-Cigna deal. Along with theJustice Department, the American Hospital Association argued thatthe combination of the two insurers would reduce the market’sincentive to innovate.

The Justice Department sued in July to defeat not only theAnthem-Cigna deal but also Aetna Inc.’s proposed $37 billionpurchase of Humana Corp. The government alleged the twoacquisitions would amount to an “unprecedented consolidation” inthe health insurance industry. In the case of Anthem and Cigna, theDOJ argued that the deal would hurt competition for consumers whoreceive health insurance through the Affordable Care Act’s publicexchanges, along with millions of others who receive insurance fromtheir employers.

Aetna and Humana abandoned their deal after a Washington judgeblocked it in January.

But Anthem has pushed forward, even as it faces a lawsuit fromCigna in the Delaware Court of Chancery seeking a $1.85 billiontermination fee and an additional $13 billion in damages. Apreliminary injunction hearing is scheduled for May 8.

The Anthem-Cigna deal had been dogged by discord between the twosupposed merger partners. In her decision to strike down the deal,Jackson described the tension between the two companies as the“elephant in the room,” noting that a lawyer for Cigna hadcross-examined a defense expert during the district court trial andundermined Anthem’s forecasts for future savings from theacquisition.

Rogers, in a footnote, described Cigna as only a “reluctantsupporter of the merger.”

One looming question on the horizon will be how the Trumpadministration’s Justice Department responds to the ongoing “mergerwave” in corporate America.

Trump’s pick to lead the Antitrust Division, Makan Delrahim, hassuggested that big isn’t necessarily bad. Delrahim, a formerBrownstein Hyatt Farber Schreck lobbyist, had advocated forAnthem’s push to merge with Cigna.

Delrahim’s confirmation hearing before the Senate JudiciaryCommittee was delayed at the last minute earlier this week. Sen.Chuck Grassley, R-Iowa, said the panel was “still waiting on onepiece of paperwork.” The committee was waiting for a so-calledpreclearance document from the Office of Government Ethics, aspokesman said.