WASHINGTON—The U.S. Court of Appeals for the D.C. Circuit, in a split decision issued Friday, upheld a lower court’s ruling that had blocked a proposed $54 billion merger of Anthem Inc. (NYSE: ANTM) and Cigna Corp., (NYSE: CI) two of the largest health insurers in the U.S.

The U.S. District Court ruled in February that the proposed deal combining the two insurers should not be allowed because it would lead to higher prices for consumers, as VMail reported.

In their ruling, the justices writing the majority opinion noted that they believe the district court “did not abuse its discretion in enjoining the merger based on Anthem's failure to show the kind of extraordinary efficiencies necessary to offset the conceded anticompetitive effect of the merger” in the 14 states where Anthem operates.

In a dissenting opinion, Judge Brett Kavanaugh wrote that he believes the merger wouldn't substantially lessen competition for large employer insurance services.

Anthem, in a statement issued late Friday afternoon, said it was “disappointed” by the decision “given that the demonstrated efficiencies make this a pro-competitive, consumer friendly transaction.” Anthem also noted that it is “committed to completing the transaction and are currently reviewing the opinion and will carefully evaluate our options.”

Cigna, in a form 8-K filing on Friday, noted that first district court “enjoined the proposed merger” and that the Court of Appeals “affirmed the decision of the District Court” Friday. “Cigna continues to work through the litigation process in the pending Delaware Court of Chancery matter involving Cigna and Anthem,” the 8-K filing noted. A Cigna spokesman said the company would have no other comment on the court decision.

Anthem has filed suit in Chancery Court seeking to prohibit Cigna from backing out of the proposed merger, and a hearing on the issue is set for next month.

The DOJ and attorneys general from several had filed the lawsuit seeking to prevent the merger of the two companies, as well as a similar proposed merger of Aetna and Humana, as VMail reported. The suit alleged that the deals would harm competition and reduce from five to three the number of large, national health insurers in the nation.