Arthur Sadami Ticiana Lima December 2 2021 CADE's economic studies department publishes new studies on healthcare sector VMCA | Competition & Antitrust - Brazil Arthur Sadami, Ticiana Lima Competition & Antitrust First studySecond studyThird studyCommentOn 28 October 2021, the Administrative Council for Economic Defence's (CADE's) Department of Economic Studies published three studies on healthcare markets.(1) The studies comprise a series of analyses of competitive features of those markets and lay out the CADE's new perspectives on the sector.First studyThe first of those studies, "Concentration, prices, and average tickets in private health insurance and plans",(2) aims to analyse the correlation between concentration levels and ticket levels within healthcare markets. The study concludes that, despite being highly concentrated, the national healthcare markets are marked by strong rivalry among health insurance providers which, together with economies of scale, reduce the average tickets that are charged by companies. This conclusion also poses questions on the geographic definition of those markets and it highlights the need for further investigation of the effect of the size of Brazilian cities on entry conditions, and the minimum viable scale for operation.Second studyThe second of the studies, "Hedonic prices in healthcare",(3) aims to estimate how the characteristics of health insurance plans are reflected in pricing. Overall, the study concludes that in Brazil there is a greater diversification of products – reflected in prices – than in other jurisdictions, especially regarding the services covered by the health insurance and its geographic scope. As indicated by the study, there is a low substitutivity among those products, which raises questions about the existence of actual competition between them.Third study The last study, "Regulation and competition in healthcare",(4) aims to discuss the main effects of regulation over competition within healthcare sector. The study indicates that regulatory rules in Brazil usually are not directly aimed at competitive issues, which implies that there is a blind spot in the regulation. However, the study also points to the fact that the regulation imposes significant costs to entry and to operate in the market, which can be a burden to smaller competitors and, therefore, increase concentration in these markets.CommentIn general, the studies may signal changes in the CADE's enforcement in the sector:Consumer preferences become more significant in merger control, as further segmentations in the relevant product market (eg, low-cost, medium-cost or premium health plans and specific hospitals) could become part of the CADE's assessments.The CADE's definition of the geographic market could be further complexified to reflect the size of the cities and local competitive factors.Alternative proxies for merger control (eg, quality) could be adopted due to the limitations of price information.The CADE may also intensify its institutional dialogues with the National Regulatory Agency for Private Health Insurance and Plans, even by means of specific protocols and shared resolutions aiming to encompass regulatory and competitive issues within the sector.In any case, it remains to be seen how the CADE will approach these issues in future enforcement based on these studies.For further information on this topic please contact Arthur Sadami or Ticiana Lima at VMCA by telephone (+55 11 3939 0708) or email ([email protected] or [email protected]). The VMCA website can be accessed at www.vmca.adv.br.Endnotes(1) In Portuguese.(2) Pages 10 to 62.(3) Pages 63 to 114.(4) Pages 115 to 160.