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Bundeskartellamt clears acquisition by Helios Kliniken (Fresenius) of 40 clinics and 13 medical care centres operated by Rhön-Klinikum AG

Date of issue: 20.02.2014

The Bundeskartellamt has cleared plans by the Helios clinics, which belong to the Fresenius group, to acquire the control of a total of 40 clinics and 13 medical care centres operated by Rhön-Klinikum AG. In light of the competition concerns expressed by the authority about the regional hospital markets in Cuxhaven, Schwerin, Gotha and Borna/Zwenkau near Leipzig, the parties scaled back their original plans. Helios's announced intention to conclude a network agreement with Rhön and further hospital operators was left out of the current merger control proceedings.

Andreas Mundt, President of the Bundeskartellamt: "The Fresenius/Rhön merger project is the largest as yet in the German hospital market and has therefore been examined very carefully by the Bundeskartellamt. The project raised competition concerns on four hospital markets. The parties were able to dispel these concerns during the course of the proceedings, leaving patients at the different locations with alternatives to choose from. Helios's planned network agreement with Rhön will be examined by the Bundeskartellamt in separate proceedings.”

In October 2013 the European Commission referred the merger project to the Bundeskartellamt. The companies originally planned the acquisition by Helios of in total 43 acute care and rehabilitation clinics as well as 15 medical care centres from Rhön.

The examination uncovered overlaps in the activities of Helios and the target companies of the Rhön group in six regions. It raised competition concerns on four regional hospital markets in Cuxhaven, Schwerin, Gotha and Borna/Zwenkau near Leipzig. To dispel these concerns the parties excluded from the transaction the hospitals operated by Rhön in Cuxhaven, Boizenburg and Waltershausen-Friedrichroda and the medical care centres in these areas. These institutions will not be transferred to Helios but will remain with Rhön. In the Borna/Zwenkau region, Helios sold the leading hospital, Helios Kliniken Leipziger Land with sites in Borna and Zwenkau, to a third party during the course of the proceedings. This eliminated overlaps with Rhön in this region as well, dispelling all previous competition concerns. The merger project is not expected to significantly hinder effective competition in the other overlap regions in the Harz and Wiesbaden.

In its examination the Bundeskartellamt looked closely at Helios's market position vis-a-vis the health insurance funds. For its hospital and medical care services the operator receives payment from the statutory health insurance funds and the private health insurance companies. Ultimately, the planned merger was not expected to significantly hinder effective competition on these markets. On the one hand Helios's position in negotiations on funding in the individual federal states will remain limited even post merger. On the other hand rates of funding are not freely negotiated but are subject to special statutory regulations which restrict market power, allowing in particular the possibility of the health insurance funds to consult an independent ombudsman.

Andreas Mundt: "Since Helios is part of the Fresenius group, a leading manufacturer of medical products, the question also arose as to what consequences the acquisition of the Rhön sites could have for other manufacturers and hospital operators. In contrast to the analysis of the markets from the patients' perspective, no regional market definition was applicable in this case because the hospital operators buy medical products at least on a nationwide basis. The hospital groups concerned still have relatively low market shares on these markets in spite of increasing consolidation in the sector. For this reason the acquisition did not raise any substantial concerns."

The project is also not problematic in terms of other hospitals' dependence on Fresenius products because here too there are sufficient procurement alternatives in the market. There is also no incentive for Fresenius to foreclose the market because such measures would seem unprofitable in view of the expected loss of turnover.

The extensive investigations in the main examination proceedings also focused on supply markets for outpatient medical care, outpatient dialysis, inpatient psychiatric treatment and inpatient rehabilitation and preventive care. Here there were only minimal and unproblematic overlaps in care provision.

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