May 10 2012
Reduction in capacity in outline agreement
The healthcare sector is one of the Competition Authority's focus industries, which means it is subject to closer investigation. The authority recently blocked a merger between two healthcare providers in central Netherlands and ordered a second-phase investigation into three further planned healthcare mergers. However, the reduction in capacity set out in the recent outline agreement between healthcare providers, health insurers and the Ministry of Health, Welfare and Sport appears to have the authority's blessing.
Unlike EU merger control, Dutch merger control has had special (lower) notification thresholds for healthcare concentrations since 2008. Although many healthcare concentrations fall outside the regular concentration thresholds due to the low turnovers involved, they could still have a negative impact on competition as a result of the often narrow scope of the relevant geographic markets. The lowering of the thresholds has led to a dramatic increase in the number of healthcare mergers reviewed by the authority. Of the 150 notifications that the authority has reviewed in the healthcare sector since 2004, eight intended notifications were withdrawn and eight potential merger plans were adjusted to address the authority's antitrust concerns.
In accordance with its policy rules for mergers between healthcare providers,(1) the authority's assessment of healthcare concentrations usually focuses on four issues:
The merger that was blocked involved two providers of services including nursing home care in a region in central Netherlands. According to the authority's investigation, the two healthcare providers were each other's closest competitors, with patients often choosing local providers. The merger would thus have affected the quality of healthcare services, since the two healthcare providers would no longer have had an incentive to differentiate themselves from each other through, for example, innovation.
Reduction in capacity in outline agreement
Most hospitals in the Netherlands offer a wide range of specialist care. The recent outline agreement between healthcare providers, healthcare insurers and the Ministry of Health, Welfare and Sport aims to concentrate this specialist care among hospitals in order to achieve higher quality for ower costs.
The authority supports the concentration of specialist care as long as it either is under the health insurers' direction or constitutes an independent decision of the respective hospitals. Independent decisions of health insurers or hospitals will generally not come under competition scrutiny. By identifying the different types of specialist care that different hospitals offer, health insurers will be able to safeguard the quality and availability of healthcare for their policyholders. Similarly, hospitals are free to decide independently whether and how to concentrate their specialisations without coming up against competition rules. However, specialisation agreements concluded between hospitals themselves would be caught by the cartel prohibition, as this would limit patients' options and would thus result in restricted competition.
The authority has published a flow chart to help the healthcare sector navigate between the reduction in capacity mentioned in the outline agreement and the competition rules.
For further information on this topic please contact Jolling De Pree or Erik H Pijnacker Hordijk at De Brauw Blackstone Westbroek by telephone (+31 70 328 53 28), fax (+31 70 328 53 25) or email (email@example.com or firstname.lastname@example.org).
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