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CADE applies restrictions on purchase of hospitals in Brasilia

Merger

The antitrust agency conditioned the approval of the transaction by the sale of the Santa Lucia hospital or the sale of the Santa Luzia hospital
published: Jun 27, 2013 03:20 PM last modified: May 02, 2016 03:33 PM

Rede D’Or’s incorporation of the Medgrupo Participações S/A and of the Hospital Santa Lúcia S/A, both located in Brasília, will only be authorized by the Administrative Council for Economic Defense – Cade - upon the sale of a set of assets. In order to dismiss the case, the antitrust agency conditioned the approval of the transaction by the sale of the Santa Lucia hospital or the sale of the Santa Luzia hospital and the sale of the Coração Hospital. 

The first two hospitals are the biggest rivals in the area and the Council therefore decided, unanimously, that they could not be under the control of the same economic group without any harm to competition.

The reporting commissioner, Ricardo Ruiz, highlighted the high concentration that would result from the union of Santa Lucia, Santa Luzia and other Medgrupo hospitals. The group would control more than half of the hospital care of the Capital. The market share of these establishments varies from 50% to 60%, depending on the analyzed indicator - number of beds, billing, etc.

Apart from the size, these are the hospitals that offer the greatest variety of services, doctors and equipment.

Ruiz explained that if approved, the operation could generate multiple losses to consumers such as higher prices, loss of service and medical care quality, in addition to the exclusion of competitors.

The Medgrupo controls the following hospitals: Santa Helena, Prontonorte, Renascer, Maria Auxiliadora and Santa Lucia. Additionally there are the radio clinics Centro Radiológico do Gama e do Centro Radiológico de Brasília. As to Rede D'Or, it controls Santa Luzia Hospital and Coração Hospital.

The commissioner said that the sale of assets is required due to low rivalry caused by the lack of hospitals capable of offering the same range of healthcare services to meet demand.

Cade's decision states that the buyer of hospital Santa Lucia or Santa Luzia and Heart Hospital has the financial capacity for the future investment and sufficient capacity in the management of large hospitals, that it does not have any link with Rede D 'Or, BTG Pactual, Medgrupo or groups connected to these groups and is able to ensure the maintenance of employment levels of all the units for at least six months after the acquisition.