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CADE General Superintendence suggests rejection of the acquisition of Aliança by Qualicorp

Merger

Operation will be decided by the Tribunal
published: Feb 08, 2013 10:00 AM last modified: May 03, 2016 06:18 PM

The General Superintendence of the Administrative Council for Economic Defense – CADE - recommended the rejection of the purchase of companies that integrate Aliança Administração de Benefícios and GA Consultoria by Qualicorp. The transaction entails the acquisition by Qualicorp of 60% of the both companies’ shares. The case will now be reviewed by the Tribunal of Cade, which renders the final decisions within the Council.

For the General Superintendence, the acquisition would lead to reduction in competition in the healthcare benefits administrator market and thus reducing existing benefits and welfare to consumers of that service.

The healthcare benefits administrator market is relatively recent and consists of companies that intermediate, before health plan operators, the contracting of health plans by collective entities or associations (unions, associations, etc.) and employers. Companies that operate in this segment assist the contractors in the operational management of these benefits, assuming responsibility for various activities, such as the issuance of bills for beneficiaries, collection of debt and negotiations with Health Plan Operators.

According to the released official opinion, Qualicorp is the market leader with a participation of over 70%. On the other hand, Aliança is the main competitor and holds approximately 10% of market share.

The official opinion explains that the acquisition would result in the control of about 80% of the national market for both companies. Aside from the high concentration, the General Superintendence recognized that the market has a number of barriers to the incoming of new competitors. Finally, it was identified that the healthcare benefits administrator market has a low level of rivalry, because of the large size difference between the remaining competitors in the market and the company resulting from the merger - which limits the ability of these small businesses to compete with the market leader.

In the opinion of the General Superintendence of Cade, any of the alleged benefits that might result from the transaction are not able to fend off the potential negative effects on competition.

The merger was notified in June and is being processed under the old antitrust law, Law no. 8.884/94.