Bundeskartellamt clears hospital merger in the Allgäu region

In the first phase of examination the Bundeskartellamt has cleared the planned merger of the hospital group Klinikverbund Kempten-Oberallgäu gGmbH, Immenstadt, with the district clinics Kreiskliniken Unterallgäu AöR, Mindelheim, resulting in the creation of a new hospital group under the management of Sana Kliniken AG, Ismaning. The project was cleared in spite of the high market shares of the clinics concerned.

Andreas Mundt, President of the Bundeskartellamt: “Competition is an important means to ensure a high quality of treatment in the hospital sector for the benefit of the patient. If patients and referring physicians can choose from a sufficient range of hospitals run by different operators, hospitals will be induced to attract patients and invest in the quality of their establishments and innovation. The proposed merger will result in high market shares of the merging parties in the regions affected. However, we were able to clear the merger because patients will still have sufficient options to choose from.”
The Oberallgäu hospital group operates four general hospitals in Kempten, Immenstadt, Sonthofen and Oberstdorf with a total of 751 beds as well as a rehabilitation centre and medical care centres. The Unterallgäu district clinics operate hospitals in Mindelheim and Ottobeuren offering 310 beds in total and a medical care company. Sana Kliniken AG is one of the large private hospital operators in Germany with 40 acute hospitals as well as specialist and rehabilitation clinics and medical care centres.
The parties to the merger are the market leaders in the two relevant neighbouring regions of Kempten-Oberallgäu and Mindelheim-Unterallgäu.
The merger project could be cleared nonetheless because it did not significantly reduce the existing options for patients. More important competitors than the respective merging partners will remain in both regions after the merger, namely Kliniken Ostallgäu or Klinikum Memmingen. The nearest Sana operated hospitals are situated in Biberach and are of no consequence in this case.

Particular consideration was given to the fact that the Unterallgäu district clinics are relatively important only for patients from part of the Kempten-Oberallgäu region and are generally only a comparably remote competitor of the clinics of the Oberallgäu hospital group in terms of the number of cases and range of treatments. The merging of the two operators will not reduce their incentives towards innovation and improving service quality.

Background - Merger control in the hospital sector:
Irrespective of their operators, hospitals are independently active as entrepreneurs and compete with one another. Due to strict legal provisions there is almost no price competition in this sector. It is therefore the main objective of merger control to maintain competition in the quality of healthcare for patients. It is crucial to ensure that patients have sufficient local options to choose from.

In spite of the growing concentration in the hospital sector only very few mergers had to be prohibited by the Bundeskartellamt in recent years. Of the 309 transactions examined between 2003 and September 2019 only seven were prohibited. Five merger projects were not notified after they had been critically assessed following an informal advance enquiry.