The Italian Competition Authority to examine a market-share agreement in the health care sector

By the decision made on 6 November 2013 in the Sanità privatanella regione Abruzzo or Health Services Providers in the Region of Abruzzo) the Italian Competition Authority (ICA) has opened a competition investigations against a number of health services providers that were alleged to have entered into a market sharing agreement.
According to the provisions enacted by the regional authorities of Abruzzo, in order to provide health services on behalf of the national health system, private operators have to be awarded by regional authorities the authorization to supply such services. Each year the regional authorities allocate to each authorized operator a sum of money through which fund the health services it provides. The market for the provision of health service by private operators in the region of Abruzzo is an oligopoly dominated by the undertakings against which the ICA opened an investigation, Synergo, Villa Serena, Di Lorenzo and Villa Letizia and are all managers of nursing homes. The parties together account for 67% of the yearly budget for health services provided by private operators allocated by the region of Abruzzo. The market has also high regulatory entry barriers with the result that new entries are only possible by merging with an authorized operator or in case of reduction of the budget allocated to incumbents.
The ICA enquiry  focuses on the ways in which the parties participated in the competitive tender procedures for the sale of three nursing homes (Santa Maria, Sanatrix and Villa Pini) belonging to the Angelini Group now in receivership. Only De Lorenzo bid, though unsuccessfully, for Santa Maria and Villa Letizia was the only one to bid for Sanatrix, which was awarded to it. As for the sale of Villa Pina, the first four tenders did not raise any interest from the parties. Then Villa Serena, Synergo and Di Lorenzo decided to jointly bid through a joint-venture, Santa Camilla, they formed to that end. Eventually the winning bid was submitted by Santa Camilla. According to the ICA the reason why Villa Serena, Synergo and Di Lorenzo finally bid was to frustrate the market entry of a new operator. Moreover, since Synergo, Villa Serena and Di Lorenzo were all in possession of the requirements to bid for Villa Pini individually, the ICA believed that the reason why parties set up a joint-venture to jointly bid for it Villa Pina was to avoid competition among them.

In sum, in the ICA view the above conducts were part of a complex market sharing strategy. Arguably, the high degree of market concentration, the high entry barriers that should shield the parties against new competitors and the fact that the market shares of the actual competitors are low compared to those of the parties are all factors conducive to collusion. And accordingly, these factors may be taken by the ICA as evidence of the alleged market-sharing agreement. 

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