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Further investigation needed into merger between providers of nursing home care in city of Den Helder

20-08-2019

Two health care providers, Stichting Omring and Stichting Vrijwaard, in the northern Dutch city of Den Helder wish to merge. They have informed the Netherlands Authority for Consumers and Markets (ACM) about their plans. These providers offer nursing home care and other types of elderly care in Den Helder. In order to be able to determine whether the merger would result in a dominant provider for different types of elderly care in Den Helder, further investigation is needed. ACM will investigate whether sufficient choice will remain for the elderly and their families after the merger. In addition, the incentive to set yourself apart may be eliminated as a result of the merger. ACM therefore comes to the conclusion that further investigation is needed into the effects of the planned merger.

Merger as a necessary step in order to prevent bankruptcy

Considering the dire financial situation that Vrijwaard is in, both providers indicate that the merger is necessary for preventing Vrijwaard from going bankrupt. This so-called ‘failing firm defense’ is seldom used. If merging parties do use that defense, they will have to demonstrate that, after the merger, the competitive landscape would not be worse than without the merger. ACM is of the opinion that possible alternatives to the planned merger do exist that would be less anticompetitive. Should Vrijwaard go bankrupt in the interim, the receiver and the various health care buyers will be responsible for the continuation of health care services. In that scenario, too, ACM believes that all or several activities of Vrijwaard can be acquired by other health care providers than Omring.

What are the next steps in the investigation?

If both providers wish to go through with the merger, they will have to apply for a merger license with ACM first. ACM will then conduct a further investigation, and decide whether or not the license will be granted. Merging parties can only go through with their merger if they have obtained a merger license granted by ACM.