MERGERS: The Antimonopoly Office approved concentration of PENTA INVESTMENTS LIMITED and NaP Holding

17.03.2014
The Antimonopoly Office of the Slovak Republic, Division of Concentrations approved on 05.03.2014 the concentration grounded in acquisition of indirect exclusive control of the undertaking PENTA INVESTMENTS LIMITED („PIL“) over the enterprise of the undertaking NaP Holding. The Office concluded that the concentration would not significantly impede effective competition in the relevant market, in particular through the creation or strengthening of a dominant position of the undertaking PIL.

Through concentration PIL acquires control over the general hospitals in Žiar nad Hronom (with subsidiaries in Žiar nad Hronom, Banská Štiavnica, Kremnica and Žarnovica) and in Rimavská Sobota.

The Office identified that PIL and NaP Holding realizes activities in the area of healthcare in the following segments:
  • hospital healthcare (HHC),
  • ambulance healthcare (AHC),
  • services of common examination and medical institutions (SEandMI),
  • pharmacy care (PC) – only undertaking PIL acts in this area,
  • work healthcare (WHC),
  • transport healthcare (THC),
covered (except for WHC) mainly by the obligatory public health insurance. PIL acts also in the area of providing obligatory public health insurance through the health insurance company DÔVERA. Office has been assessing the impact of concentration on competition both from the horizontal and vertical views.

Within the horizontal assessment the Office has been investigating the overlapping of the activities of PIL and NaP Holding health care institution. In the area of HHC and AHC the analysis was based on the data on patients´ migration, it means data on number of patients and sums of payments for patients within particular hospitals/ambulances. Within the vertical assessment the Office has been investigating whether the PIL health care institutions could require more advantageous contractual conditions from the health insurance companies after the concentration and on the other hand it also has been investigating whether the health insurance company DÔVERA could exclude or restrict competition in its relation to competitors of PIL health care institutions through not concluding contracts with certain institutions or through providing worse contractual conditions. The Office has been dealing with the question how real the impacts would be, thus whether it is possible that the parties to concentration would act in such manner, whether they are motivated to do so and whether such behaviour might have negative impact on competition.

Assessing the concentration the Office regarded also the specifics of providing and purchase of health care given mainly by the nature of arranging the contractual relations and existing regulation in this area.  

Hospital healthcare

HHC is provided by hospitals (general or specialized), also sanatorium, hospice, community care service, spa, spa sanatorium and institutions of biomedicine research, namely to the person whose state of health requires constant health care more than 24 hours. Nature of provided health care depends on particular HHC provider.

In the area of HHC the Office has been assessing the overlapping of PIL and NaP Holding activities and position of PIL after concentration:
  • in the view of hospitals as a whole and
  • in the view of providing particular specialists
in the geographic relevant markets determined by the Office based on analysis of migration of patients from the particular districts compared with the districts where PIL hospitals reside.

In area of HHC PIL and NaP Holding activities overlap only in some specialists and only in minimal rate, thus the concentration does not have negative impact on competition in the horizontal view.

From the vertical view the Office found that after concentration PIL hospitals would play important role in relation to health insurance companies in ensuring the accessible HHC, but the costs of particular health insurance companies on HHC provided by PIL hospitals (including hospitals acquired by concentration) represent only the small share of their costs on health care. As the impact of concentration in the view of excluding the competitors of hospitals acquired by PIL through Dôvera was not proved the concentration does not have negative impacts on competition in the vertical view.

Ambulance healthcare

AHC is provided by general and specialized doctors which may operate within the hospital policlinic, independent policlinic or may have an independent ambulance, namely to the person whose state of health does not require constant health care more than 24 hours.

In this case it was not necessary to deal with the impact of concentration of AHC provided by general doctors and by gynaecologists and dentists. The Office focused on specialized AHC (it means of specialists in the area of ophthalmology, infectious diseases, internal medicine, orthopaedics etc.).  Determining the geographic dimension of relevant markets within the specialized AHC the Office came out from the district since the specialists usually operate in district town and the patients from the given district arrive to district town.

In the area of providing AHC the Office mainly analysed those specialisations in which after concentration PIL would be the only provider in the particular geographic relevant market.

In the view of horizontal overlapping the Office found out that the concentration would not result in significant overlapping of activities realized by the parties to concentration.

The Office analysed the concentration in the area of providing AHC also from the vertical view and it regarded the fact that within the arrangement of conditions between the health insurance companies and AHC providers the associations entering the negotiations on prices and contractual conditions have more significant impact. At the same time the Office found out that the costs of particular health insurance companies on AHC provided by health care institutions which will be controlled by PIL after concentration represent only inconsiderable part of their costs on health care, even the negative impact on concentration in the view of excluding PIL competitors was not proved in the area of providing AHC. Based on these facts the Office concluded that the concentration in the area of providing AHC does not have negative impact even in the vertical view.

Services of common examination and medical institutions

Common examination and medical institutions ensure and realize examinations, analyses and tests referring to the provided ambulance health care or hospital health care.

PIL and NaP Holding through undertaking controlled by them in the area of providing laboratory services of SEandMI act in the following manner:
  • group of undertaking PIL through Mestská poliklinika Sereď and Železničná nemocnica a poliklinika Bratislava,
  • group of undertaking NaP Holding through Nemocnica Rimavská Sobota and Nemocnica Žiar nad Hronom – subsidiary Žiar nad Hronom and subsidiary Banská Štiavnica.
In the area of providing laboratory services of SEandMI the horizontal overlapping of PIL and NaP Holding activities was identified only in the area of biochemistry. In the view of requirements of the SEandMI services consumers referring to the promptness of delivery of laboratory results in biochemistry we may divide the results on (1) urgent, so called statim examinations where the HHC (possibly also AHC provider) requires to deliver the result till 1, at maximum 2 hours from submission of biological sample and (2) routine (non-statim) examinations. For this specialization the Office found out that providing of subjected laboratory examinations (both statim and non-statim) by the undertaking PIL and NaP Holding does not overlap. Thus the Office did not identify the negative impact of concentration in the horizontal view.

Regarding the fact that the parties to concentration provide the mentioned service only in minimum extent and the costs of health insurance companies on purchase of SEandMI services provided by undertakings belonging to economic groups both of PIL and NaP Holding undertakings are inconsiderable, the Office did not identify the negative impact of concentration in the vertical view.

Pharmacy care

Only undertaking PIL acts in the area of providing of pharmacy care through the public pharmacy, thus in this area the activities of parties to concentration do not overlap horizontally.
Undertaking PIL provides pharmacy care also through hospital pharmacy which provides pharmacy services for hospital. Undertaking NaP Holding does not act in this area either. Based on these facts the Office did not deal with this area in more details.

Work healthcare

Through work health care the undertakings belonging to economic groups PIL and NaP Holding provide their employers with the expert services in protection of health of employees. Employer is obliged to ensure the work healthcare for all its employees on its own expense.

As the undertaking NaP Holding over which the undertaking PIL acquires the indirect exclusive control has been providing this service only in minimal extent, the Office concluded that the assessed concentration would not result in significant violation of efficient competition.

Transport healthcare

THC ensures the transport of patients within district for example on dialysis and extraordinary transports of patients to other healthcare institution for examination outside the given district.

Since the provided service is highly connected with the locality, the Office determined the geographic market by the districts. The closest healthcare institutions were PIL in Partizánske and NaP Holding in Banská Štiavnica. As the provided services and local and the districts of Partizánske and Banská Štiavnica are not neighbouring districts, the Office concluded that there isno reason to deal in more details with the impact of concentration on competition conditions in providing of THC in the horizontal view.

In the view of vertical impacts of subjected concentration the Office did not identify the competition concerns resulting from this concentration since even after concentration the undertaking PIL would provide the subjected services only in minimal extent and the costs of particular health insurance companies on purchase of THC services provided by the undertakings belonging to economic groups both of PIL and NaP Holding are inconsiderable.

The decision came into force on 10.03.2014.
Last update:24.03.2014