Concentration of two regional care providers ensures continuity of elderly care

Health care provider ZorgSaam has been cleared to acquire rival Warmande. The Netherlands Authority for Consumers and Markets (ACM) has announced this today. This acquisition prevents Warmande from going bankrupt. Warmande and ZorgSaam are both active in the southern and sparsely populated region of Zeeuws-Vlaanderen, offering home care and nursing home care. Warmande’s financial position is precarious. In the assessment of the acquisition, ACM took that aspect into account.

When assessing mergers or acquisitions, ACM looks at their effects on competition. With this acquisition, ZorgSaam will offer by far the most home care and nursing home care in that region. If the competitive landscape were to deteriorate because of the acquisition, ACM could block the concentration or attach conditions to the concentration such as divesting certain activities or operations.

Acquisition prevents bankruptcy

Because of Warmande’s precarious financial situation, the two providers made a failing firm defense, which is seldom used. Parties would have to demonstrate that, after the concentration, the competitive landscape would not be worse off than if the concentration were not to take place. ACM has established there is no alternative available, for example another provider willing to acquire the activities in question. Based on the investigation, it turns out that, in case of a bankruptcy, Warmande’s clients would go to ZorgSaam anyway.

Since a bankruptcy would have major consequences for all clients, an acquisition by ZorgSaam is, in this situation, the best solution. In its assessment, ACM took into account the specific circumstances in the health care market, as well as the actual situation in Zeeuws-Vlaanderen. ACM has accepted the failing firm defense, and has cleared the acquisition.