Merger analysis in markets for long-term care

How should competition authorities and regulators approach the issue of mergers among providers of care for the disabled? On September 21, Eric van Damme presented the results of a TILEC study on this topic to an audience consisting of representatives from the Dutch Competition Authority (NMa), the Dutch regulator for the health sector (NZa) and the Dutch organization of providers of care for the disabled (VGN). The latter organization had commissioned the report. The main conclusions were that, while the EC guidelines for the evaluation of horizontal mergers can be broadly followed, the actual implementation has to take the institutional characteristics of the sector into account. Indeed, in the Netherlands, some important aspects call for a cautious approach: (i) the service is almost exclusively supplied by not-for-profits (see Prüfer, 2007); (ii) health care provision and health care insurance are provided by different entities, although the two services are clearly interdependent; (iii) the 'zorgkantoor', a public monopsonist on the health care provision market, plays an intermediating role; (iv) the NZa has the option of regulating any firm that would become dominant as a result of mergers; and (v) there is a lack of data about service quality and patients' behavior. Lessons for all the participants involved were drawn and an agenda for future research was discussed.