Two housing corporations in Eindhoven have been given permission to merge. After a thorough investigation, the Netherlands Competition Authority (NMa) issued a license for the merger of Woonstichting Hertog Hendrik van Lotharingen (HHvL) and Woningstichting SWS. The corporations offer rented housing and units for rental in Eindhoven and surrounding municipalities.
The NMa establishes that, in principle, the market for social housing does leave room for competition. However, further investigation into the matter shows that the actual incentives for competition between the two housing corporations involved are bound to be very weak in the years ahead. The legal framework and structural supply shortages in the market for social housing in Eindhoven and surrounding area are of importance here, according to the NMa. This also implies that adverse consequences to competition as a result of this merger, are not to be expected.
Previously, the competition authority decided a license was required for this merger, partly with a view to possible effects on the price, quality and diversity of the housing supply to consumers. Additional research was to outline the merger's effects on the market for social housing, particularly in the cheap and affordable segment. Consequences as to the development of building locations for (mainly) social housing and the acquisition of fully developed social housing projects, were also reviewed. In this field, the number of actual competitors was found to be sufficient. Also, municipal authorities play a directive role in this market. For example, they may set up competition between corporations on issuing building licences for specific locations. Additional research, therefore, has led to the conclusion that the merger may proceed.
As announced in its Agenda 2006, the NMa carries out market research into housing corporations in order to continue providing adequate assessments of mergers in this sector. The assessment of the case involving the housing corporations in Eindhoven may prove illustrative in this respect.