The Dutch healthcare sector will be subject to an extra concentration control regime. The new regime is expected to enter into force as of 1 January 2014.
Healthcare sector and Dutch competition rules
Following changes in the Dutch healthcare legislation and the introduction of the Healthcare Market Act (Wmg) in 2006, most healthcare activities constitute an economic activity which falls within the scope of the Dutch Competition Act (DCA). Healthcare providers are subject to the prohibition of restrictive agreements, the prohibition of abuse of dominance and the merger control regime set out in the DCA.
In fact the health care sector has been subject to stricter competition scrutiny than other sectors.
The Wmg, also provided for the establishment of the Dutch Healthcare Authority (NZa). The NZa supervises both healthcare providers and insurers. One of its powers is the right to issue binding orders to dominant parties in the healthcare sector, thus preventing abuse of dominance. Such preventative measures are not possible under the general competition rules, which only allow for retrospective action against abuse of dominance.
Moreover, the general rules of the DCA also submit the healthcare sector to stricter review. Although many healthcare providers historically have strong market shares, concentrations in the sector were often not caught by the merger control regime of the DCA since the transactions did not meet the turnover thresholds. As of 2008, by way of a Ministerial Order, the thresholds for concentrations in the healthcare sector where decreased by half. This change has lead to an abundance of health care notifications.
Healthcare specific concentration control regime
On 26 November, the Senate approved an amendment of the Wmg. This amendment leads to the introduction of a healthcare specific concentration control regime. This regime will have a very wide scope. It will apply to all concentrations involving at least one supplier of healthcare that employs 50 or more healthcare providers. Concentrations between a healthcare provider and a non-healthcare provider, for example a corporation active in social housing corporations, or a private equity investor, would be covered.
As of 1 January 2014 any such transaction will be subject to a notification obligation with the NZa. The parties to the transaction will have to submit a merger effects report to the NZa in which they set out the aim and effects of the concentration. Moreover, the parties have to describe how stakeholders such as clients and employees were involved in the process leading up to the transaction and the extent to which account was taken of their views.
If the NZa is of the opinion that the stakeholders were insufficiently involved in the proceedings or if it believes that the transaction will lead to negative effects for the quality and availability of healthcare, it can prohibit the concentration or grant its approval subject to conditions.
In the future, transactions can only be notified to the competition authority, after the NZa has approved the transaction.
The ACM already consults the NZa on proposed mergers in the healthcare sector. The aspects of the quality availability and cost of healthcare already form part of the assessment under the general competition rules.
Moreover, the Dutch corporate governance rules already grant employees and clients advisory rights in relation to decisions that will have an important effect on the organisation, such as a decision to enter into a concentration. Therefore this part of the new control regime will not lead to a significant additional burden on the merging parties.
Nevertheless, it would be grossly understating the consequences of these new rules to conclude that, in fact, they do not have a significant effect.
The new additional notification procedure will impose extra procedural burdens on the parties and will influence the timing of a transaction. Moreover, it remains to be seen how strictly the NZa will interpret its new powers. It seems unlikely that flaws in the consultation procedure will lead to a prohibition of a transaction, but the NZa may well prohibit transactions which it believes to have a negative effect on healthcare provision.