NMa wants to investigate physical-rehabilitation centers in more detail

The Netherlands Competition Authority (NMa) wants to investigate the merger of two physical-rehabilitation centers in more detail. According to the NMa, the concentration between Stichting Sophia Stichting (Sophia) and Stichting Revalidatiecentrum De Hoogstraat (De Hoogstraat) could impede competition on the markets for non-clinical specialist medical-rehabilitation care for adults and children in the Dutch city of Gouda and its surrounding areas. The merger with De Hoogstraat would further strengthen Sophia’s already strong position on these potential markets. After the merger, these two providers would have a combined market share of 70-80 per cent in these markets.

If these two health care providers merge, clients will lose a serious alternative. The NMa has ruled that the planned merger must be investigated in more detail, and that a license is required for the merger to go through. The investigation will primarily focus on determining the exact size of the geographical market, and on the providers’ competitive positions thereon. If the providers in question file a license application, the NMa must decide within 13 weeks whether or not the concentration is allowed.

Physical rehabilitation centers provide specialist medical care, aimed at restoring individuals’ independence and/or improving movement and function of individuals with permanent injuries or disabilities. Clinical specialist medical-rehabilitation care means that a patient remains at the facility at least 24 hours (inpatient treatment). Non-clinical specialist medical-rehabilitation care means that patients are discharged within 24 hours (outpatient treatment).

When reviewing mergers and acquisitions, the NMa assesses whether effective competition in the market is significantly impeded, particularly when a dominant position is created or strengthened. Such a dominant position can have negative effects on the price, quality and range of the products or services offered on the market. It is important to have competition, because it encourages organizations to put more effort in offering more and better products and services. Competition offers consumers considerable advantages: competition generally leads to greater freedom of choice, higher quality and lower prices.

Since 2004, the NMa has taken more than 120 decisions with regard to concentration assessments in the Dutch health care industry. Since 2004, there have been ten concentration cases where the merging parties themselves, in part because of the NMa's objections, decided to cancel their merger plans. In addition, there have been 22 cases where the planned merger needed to be investigated in more detail, and that a license was required for the merger to go through.